Earl Pomeroy: “I rise both as a Representative of North Dakota and also as a former State insurance regulator, a solvency regulator, to…”

“I rise both as a Representative of North Dakota and also as a former State insurance regulator, a solvency regulator, to speak in favor of the substitute and against the underlying legislation. Let me talk about the underlying legislation first. This essentially ``go to a laissez-faire, let the market determine rating agency credibility'' is a very different departure from the long-established course we have been on with national registered statistical rating agencies. Just a little textbook lesson here: Transparency is generally regarded as essential to the free function of financial markets. But transparency depends upon the ability of those participating in the markets to know the credit worthiness of the players. These statistical rating agencies make an assessment of the credit worthiness of the players and put the information out so the market can employ it. Now what they would do is move away from a guaranteed assessment of credibility by a national registry on these statistical rating agencies, and they would let you have this designation for an outfit that has been in existence 3 years, with no evaluation of the competence and the credibility underlying the assessments made by these credit rating agencies. The result, of course, is predictable: widely different quality in the credit assessment brought forward by the rating agencies. This is very bad business. Very bad business for virtually all involved.…”