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.
Meanwhile, Nelson is also preparing his own possible amendment that would seek to hold rating agencies more accountable once their ratings, akin to Good Housekeeping seals of approval, are handed out.
