WASHINGTON, DC -- The Mortgage Bankers Association (MBA) has praised the Securities and Exchange Commission (SEC) for issuing proposed credit ratings agency reform measures that would promote transparency, accountability, and credibility.
"We recognize that credit rating agencies play a pivotal role in the investment community by making assessments about financial services providers and financial instruments used in the secondary mortgage market," said Kieran P. Quinn, (top right photo) CMB, MBA's Chairman. "We are pleased the SEC's recognizes the valuable impact ratings agencies have on the relationship between issuers and investors."
The first part of the proposal significantly increases the scope and depth of disclosures credit ratings agencies would be required to make. For example, ratings agencies would be required to publicly disclose the information it uses to determine a rating on a structured product.
The second part of the Proposal would require credit rating agencies to differentiate structured products ratings from bond ratings, either through the use of different symbols, or by issuing a report disclosing the differences between ratings of structured products and other securities.
"MBA is pleased that the SEC has agreed to review the differentiation of structured rating under a separate approval track because it will allows for the separate consideration of constructive rating agency reforms while at the same time maintaining MBA's strong opposition to the proposed structured rating's identifier," said Jan S. Sternin, (middle left photo) senior vice president, commercial/multi-family.
MBA will work with the SEC and other industry participants to try and address concerns about separate ratings approaches for structured securities.
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