Washington: The Obama administration on Tuesday sent the US Congress legislation seeking to tighten government oversight of Wall Street`s credit rating agencies and stem potential conflicts of interest in their business practices to protect investors.
The plan also seeks to reduce reliance on an industry
widely criticised for failing to give investors adequate
warning of the risks in subprime mortgage securities that
triggered the financial crisis.
The legislative proposal is meant to bring greater
transparency to the rating agencies and would bolster the
authority of the Securities and Exchange Commission over them.
Now voluntary, registration would be made mandatory for all
agencies large and small.
Investor advocates and other critics maintain that
conflicts of interest can arise under the current system when
companies that issue securities, as opposed to investors, pay
the agencies for ratings.
The proposal is the latest in a series rolled out in
recent weeks by the Treasury Department as part of the
administration`s sweeping plan for overhauling the US
financial rule system to help avert another meltdown.