WINNERSLOSERSInvestors who follow ratings agencies18 of 19Big 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.« Back to Financial Regulation. Related Articles:Fed's monetary policy toolboxHelp for mortgage borrowers?Financial meltdown: Credit cardsHow safe is your bank?Related Links:Types of banking institutionsSafe places for cashHow the economy affects youCommon mistakes in a bad economy advertisement
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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