{"id":581,"date":"2009-10-07T12:55:52","date_gmt":"2009-10-07T12:55:52","guid":{"rendered":"https:\/\/www.stockbrokerfraudblog.com\/2009\/10\/make_credit_rating_agencies_co_2"},"modified":"2022-09-19T08:53:08","modified_gmt":"2022-09-19T13:53:08","slug":"make-credit-rating-agencies-co-2","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/make-credit-rating-agencies-co-2\/","title":{"rendered":"Make Credit Rating Agencies Collectively Liable for Inaccuracies, Proposes Lawmaker"},"content":{"rendered":"

\t\t\t\tHouse Financial Services subcommittee chair Paul Kanjorski introduced a new draft bill that proposes making credit ratings agencies collectively liable for inaccuracies. The agencies received a lot of heat when they failed to properly warn investors about the risks associated with subprime mortgage securities before the market fell.<\/p>\n

One problem with the current system is that the firms issuing the securities are the ones paying the credit ratings agencies for rating the securities. Kanjorski’s draft bill lets investors pursue lawsuits against credit rating agencies<\/a> that recklessly or intentionally did not examine key data to determine the ratings. He says that collective liability could compel the ratings agencies to provide reliable, quality ratings while providing the proper incentive for them to monitor each other. <\/p>\n

Critics of the plan, including Republicans and industry executives, warned that collective liability could result in a slew of expensive complaints while decreasing competition even more in an industry that Fitch Ratings, Moody’s Investors Services, and Standard and Poor’s already dominate.<\/p>\n

Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

House Financial Services subcommittee chair Paul Kanjorski introduced a new draft bill that proposes making credit ratings agencies collectively liable for inaccuracies. The agencies received a lot of heat when they failed to properly warn investors about the risks associated with subprime mortgage securities before the market fell. 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