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Reply #56: SEC Grants Delay on Ratings for Asset-Backed Debt [View All]

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girl gone mad Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-22-10 05:39 PM
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56. SEC Grants Delay on Ratings for Asset-Backed Debt
SEC Grants Delay on Ratings for Asset-Backed Debt

July 22 (Bloomberg) -- The Securities and Exchange Commission will allow asset-backed bond issuers to omit credit ratings from filings for six months to help them comply with new rules that are part of the most sweeping financial overhaul since the 1930s.

Borrowers arent able to obtain permission from ratings firms to include their rankings in their registration statements, Meredith Cross, the director of the SECs division of corporate finance, said today in an e-mailed statement announcing the change.

This action will provide issuers, rating agencies and other market participants with a transition period in order to implement changes to comply with regulations that were signed into law this week by President Barack Obama, Cross said.

The financial legislation makes credit-rating companies vulnerable to lawsuits when underwriters include their assessments in documents used to sell debt. The law subjects ratings firms, such as Moodys Investors Service, Standard & Poors and Fitch Ratings, to so-called expert liability, meaning they would face the same legal risks as accountants and other parties that participate in bond sales.

Let's see where we are in six months. That's a long time to lobby for changes, find effective loopholes or make the threatened move to private markets.
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