(Washington, DC) – Senator Richard Blumenthal (D-CT) and Senator Ron Wyden (D-OR) today called on the Securities and Exchange Commission (SEC) to disclose the names of the credit ratings agencies recently faulted for deficient reporting procedures and institutional shortcomings. The SEC’s recent examination, mandated by the Dodd-Frank Bill, is a thorough investigation of the agencies who may have contributed significantly to the financial crisis due to lack of strong financial scrutiny.
In the letter, the Senators write, “These findings are highly significant, but their value is seriously limited without the credit rater’s name. In light of our current economic climate, we believe this information would prove valuable to the public. The public has a right to know this very pertinent and important information from a congressionally mandated inquiry. Even if your fact-finding is ongoing, we request that you disclose this information immediately. ”
Credit ratings agencies have been widely criticized for giving exaggerated ratings to subprime mortgages which contributed to the recent economic crisis. Despite recent findings that indicate numerous inaccuracies in disclosures and a persistent failure to manage conflicts of interest, the SEC has refused to disclose the names of the deficient agencies.
The full text of the letter is below:
Mary L. Schapiro, Chairman
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20429
Dear Chairman Schapiro:
While we applaud the SEC’s investigations into the causes of our current fiscal crisis, we were disappointed to hear that the recent examination of credit ratings agencies failed to name the specific agencies in violation of their reporting procedures.
The SEC examinations mandated by Dodd-Frank have unearthed and exposed severe institutional shortcomings that must be addressed as we revive our economy. The latest examination of the credit ratings agencies revealed repeated instances of non-compliant and deficient procedures, inaccurate reports, and mismanagement of potential conflicts of interest. These findings are highly significant, but their value is seriously limited without the credit rater’s name. In light of our current economic climate, we believe this information would prove valuable to the public.
The public has a right to know this very pertinent and important information from a congressionally mandated inquiry. Even if your fact-finding is ongoing, we request that you disclose this information immediately. As you know, Dodd-Frank requires the SEC to “conduct an examination of each nationally recognized statistical rating organization at least annually” and to “make available to the public, in an easily understandable format, an annual report” which includes a summary of “the essential findings of all examinations conducted.” The clear and indisputable expectation and intent of Congress, in our view, is that the credit rating agencies’ names be made public in connection with non-compliant or deficient procedures and other shortcomings.
We respectfully urge you to disclose the names of these credit agencies, as well as more specific information regarding procedural and substantive issues, as part of a greater effort to impart accountability and restore faith in our financial markets.
Richard Blumenthal Ron Wyden
United States Senate United States Senate