Franken Targets Rating Agencies

Source: ABC

Sen. Al Franken has written an amendment to financial overhaul legislation that would seek to prevent securities underwriters from hiring rating agencies based on which ones proved most willing to give their deals the highest possible ratings.

The three largest rating agencies, Fitch Ratings, Moody's Investors Service and Standard & Poor's, have all come under fire of late for their role in the financial crisis of 2008, and would be most affected by the proposal.

"If a failing student paid their teacher to turn their F into an A, everyone would agree that what the teacher had done was unethical," the Minnesota Democrat told ABCNews.com. "But right now, investors are being sold a phony bill of goods. We need to protect consumers from the pay-to-play system that rewards Wall Street players at the expense of Main Street."

Senators Bill Nelson, D-Fla., and Charles Schumer, D-N.Y., have agreed to cosponsor the amendment, according to a spokesman for Franken. The amendment is expected to be formally introduced later this week.

Read more: http://abcnews.go.com/Business/al-franken-set-rating-agencies-role-financial-crisis/story?id=10554631

But he is to be credited with being extremely smart. I hope this amendment makes it on the bill.

Sure you can pass a law that states only negotiating over pricing for ratings are allowed (no communication between parties other than the cost of the service), but after a few ratings "bought" from each of the three ratings agencies you dont have to have a PHD to know which agency will be most willing to assign a AAA to some real junk.

Maybe even subsidized by the govt.? I agree that the profit morive will ALWAYS end up skewing the ratings. It is unavoidable.

people every day. It's gotta be more than that.

Have seen him multiple times and shook his hand on the day of the primaries. Class act all the way, it a shame that Norm robbed him of part of his first term.

The whole CDO scam hinged on being able to get those junk "securities" the highest ratings while making them so full of gobbledygook that no one knew exactly what they were so that they'd be dazzled by both their safety and high returns, two things that never go together in nature in finance. Without collusion by the big ratings agencies, especially Moody's, the scam could never have been pulled off.

All institutional investors, from banks to foreign countries, have balance sheets full of this worthless garbage thanks mostly to those high safety ratings.

The ratings agencies are key, here. Golden Sacks couldn't have scammed the world without their help.

like pretty much everybody else....

Sweetheart. I'm sooo glad we won.

God bless Senator Franken!