The Securities & Exchange Commission in late November extended indefinitely a delay in requiring credit rating agencies such as Standard & Poor's and Moody's to be regarded as "experts" that would make them liable for material errors and omissions in their ratings, according to a the off-lead article in the Business section of The New York Times today by Jesse Eisinger.
The credit ratings companies "have long contended that their conclusions are protected by the First Amendment, much as if their ratings were as irrelevant to the markets as, say, your average financial column," the article said.
The Dodd-Frank overhaul of credit ratings tried to change that but is in limbo as the agencies revolted and "refused to allow their ratings to be used in offering circulars, freezing up the markets," the article said, adding that "panicked, the S.E.C. suspended the rule for six months, pending more study." Then, it added, it moved to extend the delay indefinitely.
"And the news get worse," the article continued, adding that "in early December, the S.E.C. issued a laconic notice that it doesn't have the money to put into effect big parts of the Dodd-Frank reforms. And now that Republicans have taken over the House, the S.E.C.'s budget for fiscal 2011 is an even greater question mark."
The credit ratings companies "have long contended that their conclusions are protected by the First Amendment, much as if their ratings were as irrelevant to the markets as, say, your average financial column," the article said.
The Dodd-Frank overhaul of credit ratings tried to change that but is in limbo as the agencies revolted and "refused to allow their ratings to be used in offering circulars, freezing up the markets," the article said, adding that "panicked, the S.E.C. suspended the rule for six months, pending more study." Then, it added, it moved to extend the delay indefinitely.
"And the news get worse," the article continued, adding that "in early December, the S.E.C. issued a laconic notice that it doesn't have the money to put into effect big parts of the Dodd-Frank reforms. And now that Republicans have taken over the House, the S.E.C.'s budget for fiscal 2011 is an even greater question mark."
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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