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For Immediate Release: July 12, 2006

REP. FRANK FLOOR STATEMENT ON CREDIT RATING AGENCY DUOPOLY RELIEF ACT OF 2006

(House of Representatives - July 12, 2006)

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Mr. FRANK of Massachusetts. Mr. Chairman, I thank the ranking member of the subcommittee for his leadership on this. The goals here do not divide us; the methods do. Maybe it is a little bit of a role reversal, but I think, as the gentleman from Pennsylvania has made clear, we believe that the SEC ought to be relied on more fully here.

   I understand the SEC supports the goals of this. We support the goals of this. The critical question is the implementation. We think this prematurely takes some decision-making that we ought to await for SEC input. We are talking about a very tough decision to make here. It is a lot of power to give an entity to be a rating agency.

   People have alluded to the great power the two existing ones have. It is important that we have complete assurance for ourselves that the process we put in place for new rating agencies be very thoroughly checked out and very much prevented against abuse. Competition is a good thing, but not competition that could be a race to the bottom; and we regard SEC as an important part of this.

   That is why the substitute that my friend from Pennsylvania has holds off on making some of these decisions, we believe, too hastily, and instead more deeply involves us with the SEC. We are not talking about waiting 5 or 10 years, but it seems imprudent to go forward without waiting for a full deliberation from the SEC.

   There are other companies eager to get into the business, but the fact that other companies are eager to get into the business should not be driving us any more than the reluctance of the existing companies to have new people in the business. Both sets of considerations should not be driving us, neither to protect the existing businesses nor to enable the new ones.

   What we ought to be doing is focusing on the public policy process for deciding who gets to do this, and we do not believe we are yet at the point where we can do that in the ideal fashion, and we will be better off if we wait for the SEC to give us its guidance.

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The Committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws.