Source:
NY TimesHouse and Senate negotiators voted on Tuesday to strip new conflict-of-interest rules for credit rating agencies out of a sweeping overhaul of the nation’s financial regulatory system, leaving in place a process that many analysts say contributed to the proliferation of troubled mortgage-backed securities that were a cause of the 2008 financial crisis. Senator Al Franken, Democrat of Minnesota, had championed a proposal that would end a longstanding practice of banks choosing the rating agencies, like Moody’s Investors Service or Standard & Poor’s, that evaluate the securities they issue. Mr. Franken and other critics of the process said having the banks choose and pay the ratings companies created a direct conflict of interest.
Mr. Franken succeeded in winning strong bipartisan support to include his proposal in the Senate version of the legislation. His amendment was adopted by a vote of 64 to 35.
But some of the chief sponsors of the regulatory overhaul, including Representative Barney Frank, Democrat of Massachusetts and chairman of the Financial Services Committee, and Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the banking committee, had opposed the idea. They warned of practical difficulties in the measure’s plan to make random assignments of rating agencies.
In conference negotiations to reconcile the House and Senate versions of the legislation on Tuesday, Senate Democrats said they were willing to remove Mr. Franken’s language and accept a proposal by Mr. Frank calling for the Securities and Exchange Commission to study the conflict-of-interest issue without immediately imposing the requirement of random assignments of rating agencies.
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http://www.nytimes.com/2010/06/16/business/16regulate.html?src=busln
Dems fold again. I guess it will be up to the EU to deal with these crooks.
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