Sen. Al Franken made a rare national media appearance on Lawrence O'Donnell's show on MSNBC this Monday evening to discuss his participation in the SEC's roundtable on credit rating industry reform this Tuesday.
Back in 2010, with bipartisan support, Franken managed to get his Restore Integrity to Credit Rating Amendment passed, which cleans up the credit rating system by making sure a bank or financial institution can't shop around for a credit rating agency that will game the system for them.
From Sen. Franken's press release when the amendment first passed back in 2010: Credit Rating Agency Reform:
The inherent conflicts of interest in Wall Street's current pay-to-play credit rating system were one of the greatest contributing factors to the economy's collapse. Right now, banks choose which credit rating agencies will rate the quality of their stocks, bonds, and other financial products, resulting in the agencies giving away undeserved top ratings to countless sub-par financial products in order to attract business.
The Senate Permanent Subcommittee on Investigations recently revealed examples of Wall Street financial institutions negotiating higher ratings from credit rating agencies for its sub-par products. Of the AAA-rated subprime-mortgage-backed securities issued in 2006 alone, 93% have been downgraded to junk status.
Sen. Franken's Restore Integrity to Credit Rating Amendment cleans up the credit rating system by making sure a bank or financial institution can't shop around among credit rating agencies to get a product's initial rating. The bipartisan proposal creates a board, overseen by the Securities and Exchange Commission, which will assign credit rating agencies to provide initial ratings in order to eliminate inherent conflicts of interest. Senator Franken's proposal passed the Senate by a 64 to 35 vote, and the final bill passed into law requires that the SEC study the problem. If the SEC does not develop an alternative mechanism to address the conflicts of interest problem, Senator Franken's proposal will go into effect.
Here's more on the SEC meeting this week: Sen. Franken to Speak at SEC’s Roundtable on Credit Rating Industry Reform:
Senator Will Push for SEC to Swiftly End Conflict of Interest that Plagues Industry, Threatens Economy
Tuesday, May 7, 2013
Today, U.S. Sen. Al Franken (D-Minn.) announced that he will participate in the Securities and Exchange Commission's (SEC) May 14th roundtable to examine the SEC's report on the credit rating industry and proposals for credit rating reform.
The report was mandated by a provision authored by Sens. Franken and Roger Wicker (R-Miss.) in 2010's Wall Street reform law. The provision requires the SEC to examine the conflicts of interest in the credit rating system that played a major role in the 2008 economic collapse and hurt millions of Americans.
"The savings of millions of people looking forward to retirement in Minnesota and across the country - and the stability of our economy - are still at risk because the enormous problems in the credit rating industry haven't been fixed," said Sen. Franken. "I look forward to discussing proposals to reform the industry at the upcoming roundtable and hope the SEC takes quick action following the discussion."
WHO: U.S. Sen. Al Franken
WHAT: SEC's Credit Rating Roundtable
WHEN: Tuesday, May 14th, at 9:00 a.m. EST
WHERE*: Securities Exchange Commission, Room L-002 (the Auditorium)
100 F Street, NE, Washington, DC 20549
*You can also view a live webcast of the roundtable here: www.sec.gov
Read more about the roundtable HERE.
It's a small bright spot when it comes to financial reform, but one I'm very happy to see Franken fighting for and helping to take some steps to fix the problems that helped to collapse our economy.