After watching the credit rating agencies fluff up ratings for trash (such as the infamous subprime loans that were bundled up and sold), it's good to see the SEC moving in this direction. Long overdue and smart but will this effort also be trounced by industry lobbyists the way Wall Street destroyed efforts for reform?
U.S. securities regulators are roughing out ideas that would make Moody's, Standard & Poor's and other credit raters more accountable to investors by potentially exposing the firms to greater legal liability.Riiigggghhhhhtttttt. Just an "opinion" that triggered billions of dollars of movement on Wall Street. Having a top rating was gold, yet in reality it was a trash pile.
The Securities and Exchange Commission is expected to issue a general discussion paper on Thursday that questions whether credit rating agencies should be regulated as "experts" under securities law, and thus subject to a tougher liability standard.
Currently, the rating agencies are not considered experts. They have argued that they are exempt from these rules because they are only providing an opinion and are protected by free speech laws.
