Vote on McHenry’s Credit Rating Proposal Wins Bipartisan Support
Washington,
Oct 28 -
Congressman Patrick McHenry (NC-10) offered an amendment late yesterday in the House Financial Services Committee to the Accountability and Transparency in Rating Agencies Act.
Congressman McHenry’s amendment placing stronger disclosure requirements on credit rating agencies was accepted with bipartisan support from his fellow Committee members.
McHenry has championed his proposal as a necessary step to help prevent another financial crisis. In March, he introduced the Credit Rating Agency Transparency and Disclosure Act to address much-needed reform in the credit rating market.
“I greatly appreciate the support we’ve received for this important reform measure. Requiring greater disclosure and transparency is critical to reforming the failed practices of credit rating agencies,” McHenry stated.
As mortgage products were packaged and sold as securities during the boom in the housing market, the credit rating industry consistently gave undeservedly-high ratings to many of these securities. This was a significant contributor to the financial crisis that followed.
Congressman McHenry’s proposal requires nationally-recognized credit rating agencies to provide additional disclosures with respect to the rating of structured securities. Specifically the bill will do the following:
- Ensure that issuers and originators are providing credit rating agencies with adequate information on the assets underlying a structured security.
- Require credit rating agencies to institute procedures for getting data from issuers and originators concerning the procedures employed to attest to the data’s veracity and the fraud detection capabilities surrounding the process.
- Require credit rating agencies to disclose in a central internet database the historical default rates of all classes of financial products they have rated.
“We must give investors and analysts the information they need to make sound financial judgments," said Congressman McHenry.
###
|
