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GAO: Dodd-Frank Plan for Ratings Agency Overseer is 'Premature'

Joe Mont | August 3, 2015

Placing some of the blame for the 2007-2009 financial crisis on nationally recognized statistical rating organizations—notably due to the questionable accuracy of credit ratings involving subprime residential mortgage-backed securities—the Dodd-Frank Act recommended that the Government Accountability Office conduct a study to determine the feasibility of creating an organization that sets standards for ratings analysts. That report, released on July 30, warns that creating such an overseer, at this time, is “premature” and would face numerous challenges.

The organization envisioned by the Dodd-Frank Act would be responsible for developing standards to govern the profession (including codes of ethical conduct); overseeing member compliance with the standards; registering or providing certifications and examinations for members in the profession; and  engaging in...

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