Conclusions about CRA and Dodd-Frank

The success or failure of the Dodd-Frank Act will be ultimately judged by history and the impact that it has with combatting some of the problems that have existed with credit rating agencies both before and after the financial crisis of 2008. Already critics have been quick to condemn the act for the perceived over […]

Consequences for Non-Compliance of Dodd-Frank

Consequences for Non-Compliance of the Law Along with the increased responsibility placed on the credit rating agencies, there are also harsher consequences if they are not compliant with the Dodd-Frank Act. Part of the legislation includes standards and new liabilities for the credit rating agencies. First, there are harsher penalties under the 1934 Securities and […]

Rules for Credit Rating Agencies

Additional Rules for Credit Rating Agencies Under the Dodd-Frank Act The Dodd-Frank Act also has some new rules for the credit rating agencies themselves with the goal of having better corporate governance and maintaining better internal control. First, the Act places more stringent requirements on the company’s board of directors and institutes are requirement for […]

Conflicts of Interest and Credit Rating Agencies

Effects of the Dodd-Frank Act on Conflicts of Interest In addition to administering rating and disclosure rules, The Dodd-Frank Act also imposes several requirements on NRSROs to establish internal control systems that prevents conflicts of interest. The bill’s drafters made it a priority to put certain guidelines in place in order to mitigate the temptation […]

Dodd-Frank and Credit Rating Agencies

Addressing Credit Rating Agencies Through Enactment of Dodd-Frank The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was passed and signed into on July 21, 2010.  A small part of this act addressed credit rating agencies and their past practices.  The act intends to (1) remove references in statutes and regulations to Nationally […]

Issues Affecting Credit Rating Agencies

Competency, Trustworthiness of Ratings, and Conflicts of Interest Credit rating agencies have not been held accountable for their ratings.  Meaning, an inaccurate rating brings no repercussion to these agencies.  If one is not held accountable for their actions, logically there is less incentive to perform well or even at a high standard.  These agencies knew […]

Credit Rating Agencies – Part One

What is a Credit Rating Agency and What Task Does it Perform? Since 1931, the United States government has encouraged or even required certain types of investors to use financial instruments or securities that have been rated high by rating agencies  (15 Chap. L. Rev. 139).  These agencies use available financial data, economic conditions, and […]