Are SEC’s proposed credit-rating agency rules ‘toothless’?

Alison Frankel (Thompson Reuters)

May 18, 2011

“In the aftermath of the economic meltdown, the credit rating agencies have evaded liability as successfully as Superman dodges speeding bullets. Just a handful of surviving cases blame the credit rating agencies for conferring rosy ratings on mortgage-backed securities that turned out to be drek. There’s a CalPERS California state court negligence suit against Moody’s, Standard & Poor’s, and Fitch Ratings that squeaked by the agencies’ motion to dismiss last May; and a pair of  Robbins Geller Rudman & Dowd cases—one for Abu Dhabi Commercial Bank and the other for Kings County and the Iowa Student Loan Liquidity Corporation—that are proceeding before U.S. district court judge Shira Scheindlin in the Southern District of New York….Marcus Stanley, policy director of Americans for Financial Reform, was also cautious about the impact of the newly proposed rules. ‘There are some sensible steps in this proposal,’ he said. ‘But one has to doubt whether they’re really going to solve the problem.’” Click here for more.