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Kanjorski Draft On Credit Rating Agency Legislation Released
Rep. Kanjorski's proposed bill on Credit Agency Reform attached. Currently perusing but some notable highlights:
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‘‘(A) REVIEW BY THE NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION.—
Each nationally recognized statistical rating organization shall establish policies and procedures to ensure that, in any case in which an employee of an obligor or an issuer or under writer of a security or money market instrument was employed by a nationally recognized statistical rating organization and participated in any capacity in determining credit ratings for the obligor or the securities or money market instruments of the issuer during the 1-year period preceding the date of the issuance of the
credit rating, the nationally recognized statistical rating organization shall—‘‘(i) conduct a review to determine whether any conflicts of interest of the employee influenced the credit rating; and ‘‘(ii) take action to revise the rating if appropriate, in accordance with such rules as the Commission shall prescribe.
‘‘(E) a requirement that each nationally recognized statistical rating organization disclose on such organization’s website a consolidated report at the end of each fiscal year that shows—‘‘(i) the percent of net revenue earned by the nationally recognized statistical rating organization or an affiliate of a nationally recognized statistical rating organization, or any person associated with a na8
tionally recognized statistical rating organization, to the extent determined appropriate by the Commission, for that fiscal year for providing services and products other than credit rating services to each person who paid for a credit rating; and ‘‘(ii) the relative standing of each such person in terms of the amount of net revenue earned by the nationally recognized statistical rating organization attributable to each such person and classified by the highest 5, 10, 25, and 50 percentiles and lowest 50 and 25 percentiles.
‘‘(F) rules providing for the establishment of a system of payment for each nationally recognized statistical rating organization that requires that payments are structured to ensure that the nationally recognized statistical rating organization conducts accurate and reliable surveillance of ratings over time, as applicable, and that incentives for reliable ratings are in place;
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Too bad Rep. Kanjorski's initiative is too little too late. The credibility of the raters is now forever destroyed. Had this initiative taken place 5 years ago, it may have had some marginal benefits. As it stands, currently, it is just mere window dressing, as more and more clients of the S&Ps and Moody's of the world migrate to truly independent third party research sources. Alas, the same issues that the legislature is tacking in their much delayed response to the rating agencies, will eventually trickle down to other subsegments of the broader market. However, as in this case, the response will be materially after the fact: restoring investor confidence is not a retroactive affair. Neither is it an affair that deals with a market that goes higher with no interruptions until it stops and everyone flees. But this is a lesson that Washington has never been able to learn before. Why naively assume that anything has changed this time.
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This is most likely just the way Rep. Kanjorski wants it... i.e., giving the appearance of taking action, but being too late for the legislation to have any profound effect.
Perhaps I just may be too damn cynical for my own good.
Naww..
That is the Rep. Kanjorski I know from my days in his district.
I just spent 2 hours analizing the buying behavior at the men's underwear rack. According to the NY Times article yesterday titled Men’s Underwear as an Economic Indicator, I had to see for myself.
"All The News Thats Shit To Print"
"I just spent 2 hours analizing the buying behavior at the men's underwear rack"
TMI
I am sorry to say that I look at all those reform trials of any thing that has "finance"attached to it,with suspect eyes. It seems that everybody in an official capacity is trying to throw something at the mix. And more strange is the "headfake"by banks when MSM mentions that this or that legislation is going to "face hurdle"in congress. As if any of those legislation will realy affect Wall St. Everybody tends to forget that it took almost tow decades to staff all those rating agencies,all the MSM,and all of wall st.firms by the current personale.Those people will only lay low for now,untill the headwind blows away,and we are back in business as usual. In fact why wait,we are already back in business as usual.The way I look at it,is that there is only one way for congress to reform everything once and for all. Decouple all retirement funds from wall st. Untill this is done,the whole economy is hostage to Wall st. And unless goverment officials play ball,then they know that s&p at 50% discount is only a couple of months away(remeber Sep-Nov 08?). And ironically, I don't believe that this is going to happen untill congress itself has no money to pay themselves(or getting paid in worthless paper)when they finally realise that they too were fooled. And by then, it is too late..................
The real issue at hand is that the guilty
still have not been penalized financially....
In fact...just the opposite...they have been
rewarded financially....
Not the way to run a country....
Just periodic legal semantic public placebos....
Nothing but "we'll do something about it next time"....
Lots of people should be "white hot hopping angry"....
and rightfully so....
Unfortunately most do not own the tools to
fight American Style Fascism....
Time to clean the barn....it just gets deeper
and deeper the longer you put it off...
Rep. Kanjorski is a bankster bought and paid for tool and one of the main Reps who pressured the FASB to change M2M rules. Don't expect anything from this tool, it's all populist posturing and nothing more.
This does seem like window dressing, but the troubles are just starting for Moody's and S&P.
S&P recently lost in court when a U.S. judge refused to dismiss a case against the ratings agencies. Those agencies were seeking refuge from such litigation under the notion that their opinions on ratings are protected by free-speech rights.
And;
States starting to go after raters
And;
"Senator Jack Reed has introduced a bill that would make it easier for investors to sue credit agencies that recklessly fail to review key information in developing a rating. (Reporting by Rachelle Younglai; Editing by Julie Vorman, Lisa Von Ahn and Tim Dobbyn) "
http://www.reuters.com/article/marketsNe...
And;
Barney Frank talking tough about ending reliance on raters
http://www.businessinsider.com/barney-frank-sounds-smart-on-ratings-agen...
And;
Insurers having hearings and already stated the need for change and less reliance on the raters.
And a biggy for MCO;
Moodys insider testify at congress end of this week on the 15 page memo, in it depicting documented fraud, and on page 15 "Based on the set of facts I described above, your office failed in its tasks and standards required of the compliance office of regulations. These failures are critical to shareholders since they may cause Moody's to lose its licensing in the US or fail to be licensed to operate in Europe"
15 page whistle blower pdf:
http://online.wsj.com/public/resources/documents/KolchinskyMemo924.pdf
1 major law suit and or loss of licensees and these may be zeros considering possible truncated revs and debt load.
This is the Kanjorski who was complaining about the oatmeal served at the home when all of a sudden ***OMG!!! IT'S AN ELKTRENIC RUNS ON THE BANKS!!!***
Then: "They don't even cook the...ummm...whatever that is here at the Command Center..."
Does this guy give any appearance of being able to craft such beautiful language as found in this Bill?
Hey, Rep? Whatever happened to the Elktranuk rans on the bankses?
CW
Enough of the "Presidential" We Will Get Them Next Time....
This does not cut it....
Next are the Bank Officers who gained while everyone else is paying for what they are not responsible for....
This means all officers of all firms who benefited from the
losses that are now devastating the world's finances....
This means clawing back and then some....some in jail....as well...
If not....Then American Style Fascism is the right label....
And lots of people have the complete right to be "white hot angry "....
Its claw back time....and then some....
The rating agencies are just the tip of the iceberg....
As if any of those legislation will realy affect Wall St. Everybody tends to forget that it took almost tow decades to staff all those rating agencies,all the MSM,and all of wall st.firms by the current personale.Those people will only lay low for now,untill the headwind blows away,and we are back in business as usual.
Goldman and Bank of Amerika run the markets along with Geithner, and beagle boy Ben. There is no free markets, only welfare capitalism and socialism for capitalism.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & opinion updated daily
As a former constituent of Paul Kanjorski's congressional district I thought this would be an appropriate time to provide this dictionary of common usage from his district for the enjoyment of all here.
http://www.coalregion.com/Speak/speakA.htm