The Senate Banking Committee last Wednesday passed a version of legislation that aims to give the Securities and Exchange Commission explicit authority to regulate credit rating agencies. The Credit Rating Agency Reform Act of 2006, aims to increase competitiveness in the industry, address conflicts of interest, and if necessary, counter abusive practices.

Specifically, the legislation would require companies seeking status as nationally recognized statistical rating organizations (NRSROs) to disclose information, including policies and procedures to prevent the misuse of nonpublic information, their code of ethics, a list of large subscribers and issuers, conflicts of interest and their organizational structure.

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