New Rules Loom for Bond-Rating Firms

Wall Street Journal (07/14/08) P. C3; Lucchetti, Aaron
A proposed House bill by Reps. Gary Ackerman, D-N.Y., and Mike Castle, R-Del., looks to impose rules on bond-rating firms' new products similar to those in place for stock and derivatives exchanges. The proposed legislation would empower the Securities and Exchange Commission to prohibit bond-rating firms from unilaterally assigning triple-A marks to new structured-finance products. Instead, SEC regulators would be charged with approving certain new products based on their structure and underlying assets. While opponents say the proposed limits will impede innovation, supporters say the legislation is a necessary step toward restoring consumer confidence in the troubled financial markets.