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Reply #62: This is actually good news [View All]

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alcibiades_mystery Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-22-10 06:13 PM
Response to Reply #50
62. This is actually good news
It's the SEC saying "Get your legal departments in order, because this IS happening."

By the way, the SEC cannot by law permanently waive ratings requirements on ABS. They also cannot reverse the outright repeal of the liability exemption that appears in the bill. Neither of these are rule-making issues. What they can do is what they've done: institute a compliance period to prepare companies (in this case, the ratings agencies) for meeting the requirements of the law.

As for the 144A matter, that's laughable. It's the equivalent of a hot dog seller saying that he will only sell hot dogs to a small group of connoisseurs exempt from general food safety requirements because he doesn't want to comply with FDA rules. It's stupid, which is why Barclay's didn't see it as a long-term solution.

The law depends on the ratings agencies exposure to litigation. I see no problem in delaying its implementation for some period to allow those agencies to get straight with the legal implications. It will only produce better ratings at the end of the day if they work out their system, fulfilling the purpose of the law and producing precisely the results I listed in the OP. I didn't frame this as some "showdown," because I'm not that interested in little daily dramas (as you seem to be). This is about policy, and this is damn good policy.
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