Thursday, April 16, 2009
It's About Time
Seeking Alpha posted this today:
"SEC takes aim at ratings firms. SEC's Mary Schapiro said the agency has 'more to do' in regulating credit-rating firms and that the performance of rating firms in connection to mortgage-backed securities has 'shaken investor confidence to its core.' The SEC held a roundtable on the topic yesterday, focusing on ways to minimize potential conflicts of interest. Suggestions included switching ratings firms to an investor-paid model from an issuer-paid model, or for fees be paid out of the rated bonds' interest payments. Schapiro had previously suggested the possibility of creating an independent oversight body to set standards for the ratings firms."
Duh, really SEC? It's about freaking time. You mean someone finally realized it's completely backwards to have companies pay ratings agencies to give them ratings...wait for it...because the companies could then demand that the ratings they receive be favorable?!? It's too much to hope for that the SEC and the ratings agencies actually implement a new payment model, but it's good to see that people are finally learning the lessons of the dot com bust - just 7 years too effing late!