Back to Business for Banks, Ratings Agencies

Rhode Island Senators Jack Reed and Sheldon Whitehouse figure in two compelling New York Times stories this week about banks and ratings agencies, two of the culprits in our economic collapse, getting back to business despite all the chatter about a fundamental reworking of our financial system.

Ratings agencies like Moody's and Standard & Poor's have come under fire for what critics say were too-rosy ratings on mortgage-backed securities, among other risky financial instruments.

A Reed bill that would grant the Securities and Exchange Commission greater regulatory control over the agencies and make it easier to sue them for "knowingly and recklessly" failing to review important information in developing ratings gets a mention in the Times piece that argues, more broadly, that the fundamental problem with the agencies remains:

Dominant agencies like Moody’s and Standard & Poor’s are paid by the companies whose securities they are evaluating.

And despite a meltdown that should have put a dent in their credibility, the agencies seems to be doing quite well, thank you: Moody's stock price is on the rise.  

Meanwhile, Whitehouse's protests against the influence of bankers get a shoutout in a Times story about how the industry's lobby managed to kill a much-ballyhooed push to give judges the power to restructure loans for distressed homeowners. For anyone interested in the ways of the lobbyist, this is a must read.

Rhody's senators get credit for their stands on these issues. But the beat goes on, it seems.

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