SEC ponders new rating-firm rules
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The Securities and Exchange Commission is considering rules to limit conflicts of interest in the credit rating industry, a key financial player under scrutiny for not sounding the alarm about risky mortgage investments soon enough.
SEC Chairman Christopher Cox said at a Senate Banking Committee hearing Tuesday that the government might soon create rules to ban credit rating firms from doing consulting work for issuers of debt.
The industry, dominated by Standard & Poor’s, Moody’s Investors Service and Fitch Ratings, has been roundly criticized for failing to accurately assess -- and warn investors about -- the risks that mortgage investments posed to financial markets.
The credit crisis has led to more than $200 billion in write-downs taken by banks and financial firms over the last year.
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