A trade group representing corporate finance professionals is pressing the Securities and Exchange Commission to amend its proposed definition of nationally recognized statistical rating organizations (NRSROs) and increase oversight of the agencies. The Association for Financial Professionals believes the proposed reforms do not go far enough. "We're pleased the SEC has acknowledged this is an issue but its proposed rule maintains the status quo and entrenching the current status," said Jim Kaitz, president and ceo of the AFP.
The SEC's proposal defines an NRSRO as a rating agency that provides publicly available credit ratings, is generally accepted in the financial markets and uses systematic procedures designed to ensure credible and reliable ratings. "We want the SEC to provide complete open market competition--it is not allowing the free market to work here," noted Kaitz, who suggested allowing the competition to work would ensure the ratings process is more credible.
The recent turmoil in the capital markets resulting from General Motors and Ford Motor Co. downgrades illustrates the importance of oversight for the existing NRSROs, added Kaitz. The AFP submitted a comment letter to the SEC last week.
