Rating overhaul averted

City A.M. Reporter
US lawmakers crafting the final regulation bill voted yesterday to kill a controversial Senate provision to match rating agencies with debt issuers.

The Senate measure was designed to crack down on perceived conflicts of interest at the largest credit rating agencies, which are paid by the issuers whose debt they rate. The measure was also designed to increase competition in the industry dominated by Standard & Poor’s, Moody’s and Fitch Ratings.

Lawmakers tasked with merging House and Senate versions of the financial reform bill agreed to instead require regulators to study and address the inherent conflicts of interest at credit agencies.

The credit rating industry has been criticised for assigning overly rosy ratings to dubious debt offerings that imploded and brought Wall Street to its knees during the 2007-2009 crisis.