TESTIMONY
Committee on Banking, Housing and Urban Affairs (United States Senate)
Good morning, Mr. Chairman, Ranking Member Sarbanes and members of the Committee. Thank you for the opportunity to testify today. I am Alex Pollock, a Resident Fellow at the American Enterprise Institute, and these are my personal views on the need to reform the credit rating agency sector.
It is important and timely for Congress to address this issue. There is no doubt that the existing SEC regulation and practice represents a significant anti-competitive barrier to entry in the credit rating business, although this was not intended when the regulation was introduced 30 years ago. Nonetheless, the actual result of the SEC’s actions, and in recent years, inaction, has been to create what is in effect a government-sponsored cartel.
A few weeks ago Barron’s magazine had this to say about the two leading rating agencies: "Moody’s and Standard and Poor’s are among the world’s great businesses. The firms amount to a duopoly and they have enjoyed huge growth in revenue and profits in the past decade.”
See full Testimony.
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