‘Consistent Rules’
“The markets must have clear and consistent rules for credit-rating agencies, and the SEC’s regulatory framework will help ensure investors have confidence in the rating process,” Daniel Noonan, a Fitch spokesman, said in an e-mailed statement.
Moody’s spokesman Anthony Mirenda said the company “believes that a modernized oversight regime will help increase confidence in the ratings process as well as instill greater discipline in the industry.”
S&P spokesman David Wargin said the firm is evaluating the rules to “determine what changes to our operations may be required.”
Guggenheim Securities LLC analyst Jaret Seiberg wrote in a note that the raters “have known these requirements were coming and we believe this is about higher compliance costs and not a threat to profitability.”
The raters face the possibility of further restrictions. Congress told the SEC to study an idea proposed by Senators Al Franken, a Minnesota Democrat, and Roger Wicker, a Mississippi Republican, to establish an independent board to select which firms grade asset-backed bonds. That would eliminate the practice of bond issuers shopping around for the best rating.
“I’m frustrated that my amendment to end the pay-to-play scheme in the credit rating industry still isn’t fully implemented,” Franken said yesterday in a statement.