Sens. Wicker, Franken Push SEC to Implement Credit Ratings Industry Reform
Senators Urge Swift Action to Clean Up Industry that Contributed to Economic Collapse
July 24, 2013
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.”
The full letter can be found below.