Serious change

14 May 2010 By Agnes Crane

Al Franken has fans. Yet lawmakers shouldn’t take the comedianturnedsenator’s amendment to financial reform legislation too seriously. It would embed government more deeply in ratings. Luckily Senator George LeMieux s plan which would do the opposite is popular too.

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The U.S. Senate on May 13 passed two amendments to the financial reform package pertaining to rating agencies, including Standard & Poor's, Moody's Investors Service and Fitch Ratings.

Senator George LeMieux's amendment, passed by 61 to 38, would strip references to the rating agencies from federal statute, aiming to eliminate the government's perceived seal of approval of ratings. This amendment dovetails with a similar provision in the House bill.

Senator Al Franken's amendment, passed 65 to 35, would create an independent board charged with matching ratings firms with structured finance deals. The amendment aims to stop socalled ratings shopping, in which issuers would hire the rating firm most likely to give its deals the most favorable ratings.

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