(Washington, D.C.) – Today, U.S. Senator Patty Murray
(D-WA) co-sponsored an amendment to ensure that as part of Wall Street Reform
legislation credit ratings are made accurate and reliable. The amendment
(3391), to the Restoring American
Financial Stability Act,
passed by a vote of 64-35.
“It is clear that inflated, inaccurate ratings
contributed largely to the housing bubble and the overall financial crisis.
Americans want to see these conflicts of interest and shady backroom deals on
Wall Street end once and for all,” said Senator Murray.
The
amendment addresses the conflicts of interest that exist under today’s
pay-for-rating system where Wall Street’s securities underwriters choose among
credit ratings agencies based on which agency is likely to provide the highest
rating for the financial products they sell.
The
amendment establishes a Credit Rating Agency Board – a self-regulatory
organization operating under the oversight of the Securities and Exchange
Commission – that would assign credit rating agencies to provide initial
ratings for financial products. The Credit Rating Agency Board would
consist mostly of investors, a representative from the issuer industry and the
credit rating agency, and an independent member. Severing the
relationship between underwriters and ratings agencies will help eliminate the
conflict of interests that compromise the integrity of ratings that are
assigned to financial products.
The amendment that passed today was introduced by
Senators Al Franken (D-MN), Chuck Schumer (D-NY), and Bill Nelson (D-FL).
Senator Murray has said that increasing oversight of Wall
Street is one of the core principles in strong Wall Street Reform legislation
that she is working to pass to hold Wall Street accountable and protect
Washington families.
Watch Senator Murray discuss her goals for Wall Street
Reform in a speech on the U.S. Senate floor.
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