June 26, 2008

The Securities Industry and Financial Markets Association's (SIFMA's) Credit Rating Agency Task Force has stated that it supports the aspects of the Securities and Exchange Commission's (SEC's) proposal on rules relating to Nationally Recognized Statistical Rating Organizations that allow the continued use of ratings. "We agree completely with the SEC that attention should be paid to over-dependence on ratings," said Deborah Cunningham, co-chair of SIFMA's Credit Rating Agency Task Force and chief investment officer of Federated Investors, in a press release. "It is important that we guard against embedded over reliance on ratings in SEC regulations, as well as in investor guidelines, state laws, Basel II, and bilateral contracts," she stated.

SIFMA's task force said that it favors what SEC staff described in its proposal and looks forward to the published written proposal, which, as described in the meeting, would allow reliance on ratings as appropriate in the areas of Rule 2a-7 and net capital rules. "Allowing continued appropriate use of ratings, while adding greater transparency to the process and more information for those who use ratings, will help ensure that ratings be used as a more effective risk management and investment tool," Cunningham added in the release. SIFMA's Credit Rating Agency Task Force intends to review and fully comment on the written proposals.