In the lead up to the 2008 financial crisis, the bond rating agencies assigned triple-A ratings to worthless mortgage-backed securities and complex products created by Wall Street, all the while knowing that retirees, cities and towns, and investors around the world relied on their ratings to make investment decisions. Their ratings brought our financial system to its knees — millions of people lost their jobs, their homes, and their life savings, not to mention costing the economy trillions of dollars.
Eleven years later, many of the Dodd-Frank reforms for rating agencies remain unfinished, including addressing a central conflict of interest wherein the same companies selling securities continue to shop around for their preferred rating. With the financial risks that climate change and the pandemic now pose, investors need objective and reliable ratings more than ever. So, I look forward to this discussion, and I want to thank Mr. Sherman for putting the time and attention on this issue that’s certainly needed. We are looking forward to seeing how we can improve this critical part of our capital markets.