AFP Proposes New Reforms for Credit Rating Agencies
Last Wednesday, 15 April, at a United States Securities and Exchange Commission (SEC) roundtable on the reform of credit rating agencies, Association for Financial Professionals’ president and CEO, Jim Kaitz, put forth two proposals for credit rating agency reform. Kaitz proposed:
According to Kaitz: “The current rating agency processes and business model are broken. The big two rating agencies were a catalyst for the sub-prime debacle and resulting financial meltdown. The time has come for a fundamental overhaul of the system to restore investor confidence and re-establish efficient global capital markets.”
AFP has been a long time advocate of credit rating agency reform. In April 2004, AFP co-authored its Code of Standard Practices for Participants in the Credit Rating Process, with the Association of Corporate Treasurers (UK) and the Association Française Des Trésoriers D’Entreprise (France), to provide an efficient and flexible solution to restoring confidence in credit rating agencies and the information they provide to global capital markets.
For additional information about AFP’s two reform proposals, please see: www.AFPonline.org/pub/res/news/ns_20090415_cra.html.