FOR IMMEDIATE RELEASE
July 24, 2013
Contact:
Ryan Taylor (Wicker): 202-224-6253
Alexandra Fetissoff (Franken): 202-224-4645
Sens. Wicker, Franken Push SEC to Implement Credit Ratings Industry Reform
Senators Urge Swift Action to Clean Up Industry that Contributed to Economic
Collapse
WASHINGTON – Today U.S. Sens. Roger Wicker, R-Miss., and Al Franken,
D-Minn., urged the Securities Exchange Commission (SEC) to act swiftly to
end the inherent conflict of interest in the credit rating industry that
played a key role in the 2008 financial crisis and continues to jeopardize
the American economy. The Senators are the authors of a provision in the
Dodd-Frank Wall Street reform law that is designed to reform the credit
rating agencies and end the practices that contributed to the financial
meltdown.
“Every day that passes with the status quo system in place means
unacceptable risk for the American economy and the American people,” wrote
the Senators in a letter to Mary Jo White, the head of the SEC.
The final version of the Franken-Wicker provision of the 2010 Dodd-Frank
reform law called for the SEC to complete a study of the ratings system and
implement additional measures if the Commission determines that it is needed
to protect investors and the public. The required study, which was completed
by the Commission last December, confirmed that conflicts of interest in the
system contributed to the 2008 crisis-and at the Senators’ urging, the SEC
held a roundtable in May to discuss what further steps, if any, need to be
taken to eliminate such conflicts. In their new letter, the Senators are
urging the SEC to finally issue new rules to reform the industry.
“The adoption, in 2010, of the Franken-Wicker Amendment to the Dodd-Frank
Act signaled the existence of strong congressional support for eliminating
conflicts of interest in the credit rating industry,” continued the senators
in their letter. “We remain deeply concerned about the existence of such
conflicts in this sector, and we urge the Commission to implement the
proposal, or combination of proposals, that will best resolve the credit
rating industry’s conflicts of interest in a meaningful and forceful way.”
Text of the full letter from Sens. Franken and Wicker is found below:
July 24, 2013
The Honorable Mary Jo White
Chairman
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Dear Chairman White,
We write today to encourage the Securities and Exchange Commission to move
forward promptly on drafting a proposed rule to address the ongoing
conflicts of interest in the credit rating industry. We appreciate the
Commission’s attention to this matter to date, but urge continued and swift
action toward implementation of a strong rule.
We applaud the Commission’s work in planning and hosting the recent Credit
Ratings Roundtable on May 14, and thank you for the opportunity to deliver
opening remarks. The three-panel series included a broad spectrum of
participants, ranging from representatives from the large and small credit
rating agencies and industry participants to a nonprofit organization and
legal scholar. The panels provided a rigorous examination of the
Franken-Wicker proposal and of alternative proposals. The participants
provided diverse views and perspectives, but one theme emerged-parties that
financially benefit from the status quo recommend we maintain the status
quo, while most others are open to improving the compensation model to
promote competition, increase transparency, and reduce conflicts.
The adoption, in 2010, of the Franken-Wicker Amendment to the Dodd-Frank Act
signaled the existence of strong congressional support for eliminating
conflicts of interest in the credit rating industry. We remain deeply
concerned about the existence of such conflicts in this sector, and we urge
the Commission to implement the proposal, or combination of proposals, that
will best resolve the credit rating industry’s conflicts of interest in a
meaningful and forceful way.
The Commission has now devoted years to the study and analysis of this
issue, and it is certainly time for the Commission to move forward quickly
on proposing a rule to address the conflicts of interest. In addition, we
look forward to receiving a written plan and updated report on the
Commission’s progress as requested in our February 13 letter. Every day
that passes with the status quo system in place means unacceptable risk for
the American economy and the American people.
Thank you for working with us on this issue that is so critical to American
investors and to the stability of the economy overall.
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Magnolia Tribune
