October 27, 2009

WASHINGTON - The Financial Services Committee today approved an amendment by Ranking Member Spencer Bachus and Capital Markets Subcommittee Ranking Member Scott Garrett to H.R. 3890, the Accountability and Transparency in Rating Agencies Act, that will reduce the reliance on credit ratings by investors.

The amendment, which is based on the Republican regulatory reform plan (H.R. 3310) that was introduced by Representative Bachus and the Republican Financial Services Committee leadership last July, removes rating references in federal statutes within the Committee's jurisdiction and also directs the federal regulators to review and remove references in regulations and report back to Congress.  For too long, the government has adopted policies that bestowed a "Good Housekeeping" seal of approval on the rating agencies and their products, which perpetuated a rating agency duopoly that contributed significantly to the mispricing of risk and a subsequent collapse of investor confidence.