Subject: Credit rating agency reform is incomplete
From: Robert E. Rutkowski

Mar. 6, 2017

Speaker Paul Ryan
Office of the Speaker
H-204 The Capitol
Washington, DC 20515
Senator Mitch McConnell
Senate Majority Leader
361-A Russell Senate Office Building
Washington, DC 20510
The Hon. Nancy Pelosi
Democratic Leader
United States Capitol
Washington, DC 20515
The Honourable Chuck Schumer
Democratic Leader
U.S. Senate
Washington, DC 

Brent J. Fields, Secretary
SEC Headquarters
100 F Street, NE
Washington, DC 20549
(202) 942-8088

Re: Credit rating agency reform is incomplete
Dear Gentlemen and Representative Pelosi:

In the on-going controversy over how strictly to regulate financial institutions and markets in the wake of the financial crash of 2008, regulation of credit rating agencies (CRAs) has dropped out of sight. Inflated ratings on securities that turned toxic played a major role in the build-up of the financial bubble that eventually burst with such costly consequences. But figuring out how to preserve the usefulness of credit rating agencies while fixing their weaknesses has proved challenging. This paper reviews the CRA problem and reform actions taken so far and discusses what else can be done to avoid future risk to financial stability from the behavior of CRAs.


First, the SEC should get on with the job of finishing its legal liability rule, so CRAs are held more accountable.

Second, the SEC should implement random assignment for structured products to help fix the NRSROs’ perverse incentive structure.

Third, if random assignment is implemented, Congress should reconsider the removal of credit ratings from regulations dealing with structured products.

Fourth, Congress and the SEC need to further examine competition in the market for credit ratings, with a view to increasing it.

Credit rating agency reform is incomplete
 Take time to review this report and give it the weight it deserves.

Thank you for the opportunity to bring this report to your attention.

Yours sincerely,
Robert E. Rutkowski
cc: House Democratic Whip Office