Financial Regulation
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Financial reform: winners and losers

Investors who follow ratings agencies
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Investors who follow ratings agencies

Big and small investors often rely on ratings agencies to help them assess a company's risk of default when buying stocks and bonds.

The Senate version of the financial reform bill had contained a mechanism that would have taken away ratings agencies' incentive to pander to large clients by taking away the hiring decision from the firm seeking a rating, says Baker. Ratings agencies would have been assigned to each company looking for ratings by a private, independent clearinghouse. However, during the conference committee, the provision was delayed for two years to give the SEC more time to study the issue and to propose alternatives.


 

 

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