The SEC this week released a Dodd-Frank Act-mandated report on conflict-of-interest issues at credit-rating agencies and measures to mitigate those issues. The report, among other things, looks at alternative means for compensating credit-rating firms and also the feasibility of establishing an assignment system for credit ratings.
One alternative model, for example, would require the SEC to create a government clearinghouse that would randomly assign agencies to rate structured finance products such as the mortgage-backed securities at the center of the financial crisis. The report recommends that a roundtable be convened to debate the various policy proposals.
Read the report.