(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.