US regulator tightens surveillance on credit ratings agencies |
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Published
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Wed, 26 Sep 2007 10:18
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LONDON (Thomson Financial) - Credit ratings agencies will face increased scrutiny in the US after the Securities and Exchange Commission (SEC) ordered seven agencies to be registered in a new national scheme.The financial regulator said the seven, which include leading agencies Standard & Poor's, Moodys and Fitch, will become Nationally Registered Statistical Rating Organizations (NRSROs) -- meaning they must disclose the procedure they use for assigning ratings.Registered agencies are also obliged to publish certain statistics like historical downgrades and default rates.'The Commission's newly-granted oversight of credit rating agencies will protect investors and enhance the reliability of credit ratings by fostering accountability, transparency, and competition in the credit rating industry,' said SEC Chairman Christopher Cox.The move is part of the US' Credit Rating Agency Reform Act, which took effect on June 26.The transparency of credit agencies has been questioned since a global drought in liquidity was sparked by defaults on US subprime loans.Lenders had packaged these risky loans into complicated products which ratings agencies frequently classed as high-quality.alex.brittain@thomson.comabr/abr/dcaCOPYRIGHTCopyright Thomson Financial News Limited 2007. All rights reserved.The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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Credit rating agencies face SEC scrutiny 