Tightening Regulation On Credit Ratings

One big slice of the blame for the mortgage mess is the credit rating agencies who were way off in their ratings of mortgage-backed securities. They rated a lot of stuff AAA — which means really good — that turned out to be junk.

Now Barney Frank and friends want to tighten regulation on the big three credit rating agencies.

There’s no talk however of opening up this monopoly to competition.

Why are we only allowed three credit rating agencies?

The Washington Post reports:

A House panel on Wednesday voted to tighten controls on credit-rating firms in response to complaints that the firms misjudged the risks of many of the mortgage-related securities that sank financial markets last year.

The House Financial Services Committee threw bipartisan support behind a bill that would try to reduce the conflicts of interests at rating firms and make it easier to sue them when they make flawed findings.

The three big credit-rating firms — Moody’s, Standard & Poor’s and Fitch Ratings — have faced stinging criticism in the past two years for giving high marks to mortgage-related securities that were backed by subprime or otherwise risky loans, helping instill a false sense of confidence among investors in the investments being sold by banks.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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