The big three credit rating agencies have long made the disclaimer that investors should not use ratings as a substitute for independent judgment. Now regulators want banks to prove they aren't doing that.

Regulators told American Banker they are drafting rules that would require banks to demonstrate they had done their own research to receive the regulatory capital benefits of holding highly rated bonds from securitizations. A regulated institution that relied solely on ratings for evaluating an investment's safety would have to hold loss reserves against the full value of its position, regardless of whether its holdings were rated triple-A or junk.

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