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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (63397)	6/15/2006 10:33:27 AM
From: shades	Respond to of 110194

CREDIT-RATING BILL IN HOUSE Yes it is a crock of shit and the crock is that the rating agency (who is it?) is threatening to do something four years from now (as opposed to now) unless things improve. marketwatch.com House committee OKs challenge to credit-raters WASHINGTON (MarketWatch) -- In a move that may open the industry to more competition, a House committee approved a bill that changes the way credit-rating agencies are designated to do business nationwide. Introduced last year by Rep. Michael Fitzpatrick, a Pennsylvania Republican, the measure strips the Securities and Exchange Commission of the power to designate credit-rating firms as "nationally recognized." The bill also gives new powers to the agency to inspect companies like Moody's and Standard and Poor's, a unit of McGraw Hill Fitzpatrick and other congressional critics have complained that it's extremely difficult to break into the credit-rating business. Moody's and Standard and Poor's control most of the credit-rating industry. But the companies have taken flak for favorably rating Enron and WorldCom just before the companies went bankrupt. There are now only five nationally recognized credit-rating firms. Besides Moody's and S&P, there are also Fitch Ratings, a unit of Fimalac (FR:003794: news, chart, profile) , A.M. Best Co. and Dominion Bond Rating Service Ltd. S&P and Moody's control about 80% of the market. "By encouraging competition in the industry, prices and anticompetitive practices will be reduced" and the quality of ratings will improve, Fitzpatrick said. Fitzpatrick's bill now goes to the full House for a vote. If it passes the House it would have to be reconciled with a Senate version. The Senate Banking Committee held a hearing about credit-raters earlier this year but hasn't moved legislation. See related story. The SEC is also exploring regulatory options to boost competition in the industry, according to Chairman Christopher Cox. But some observers believe the agency is satisfied with the status quo. "I have no hope or any belief that that SEC is going to take action," said Jim Kaitz, president of the Association for Financial Professionals and a supporter of the Fitzpatrick bill. Robert Schroeder is a reporter for MarketWatch in Washington.