“Standard & Poor’s Ratings Services President Douglas Peterson said Tuesday that a proposal to upend the credit-rating firms’ business model could create new conflicts of interest and disrupt financial markets.
“Mr. Peterson told members of the Securities and Exchange Commission, debt issuers and other credit-rating industry participants at a round-table discussion hosted by the SEC on Tuesday that regulators and lawmakers had made “tremendous progress” in increasing oversight of the credit-rating industry.
“The 2010 Dodd-Frank financial-overhaul law requires the SEC to create a board to assign a rating firm to evaluate structured-finance deals or come up with another option to eliminate the conflicts that could arise when debt issuers pay rating firms to evaluate their bonds.
“‘The proposed system could create new conflicts,’ Mr. Peterson said at the first of three panels at the all-day round table in Washington. ‘The system could be costly and slow to implement, causing uncertainty in the marketplace.'”
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