Political Quotes

“in the wake of the Enron and WorldCom scandals, it is vital that Congress bring competition, transparency and accountability to the credit rating industry. Thanks to the leadership of House Financial Services Committee Chairman Mike Oxley and Capital Markets Subcommittee Chairman Richard Baker, our quest to reform the credit rating industry is becoming a reality. It is extremely disturbing that the two largest NRSROs, S&P and Moody's, rated Enron at investment grade just prior to its bankruptcy filing. Essentially, S&P and Moody's told the market that Enron was a safe investment; and Enron was not their only blunder. S&P and Moody's also rated WorldCom and Orange County at investment grade just prior to their bankruptcy filings. But what other options were out there? There are over 130 credit ratings agencies in the financial market. However, only five are currently designated as NRSROs by the Securities and Exchange Commission. This label is the root of the problem. To receive the elusive SEC distinction, companies must be "nationally recognized" or, that is, their ratings must be widely used and generally accepted in the financial markets. This artificial barrier to entry has created a chicken-and-the-egg situation for non-NRSRO credit rating agencies trying to enter this industry, thus fostering a duopoly. S&P and Moody's have over 80 percent of the market share, and they rate more than 99 percent of the debt and preferred stock issues in the United States.”