MBA and CMSA oppose creating different credit rating process for structured securitiesMortgagePress.comMBA, CMSA, Sen. Christopher Dodd, Sen. Richard Shelby, Turmoil in U.S. Credit Markets: The Role of the Credit Rating Agencies
The Mortgage Bankers
Association (MBA) and the Commercial Mortgage Securities
Association (CMSA) joined with the Real Estate Roundtable and
the National Association of Realtors to send a letter to Senate
Banking Committee Chairman Christopher Dodd and Ranking Member
Richard Shelby opposing proposals to differentiate between ratings
for structured finance products and ratings for other asset
classes, such as corporate and municipal bonds.
The letter, sent to Senators Dodd and Shelby today, in advance
of a Senate Banking Committee hearing held April 22, 2008 on
Turmoil in U.S. Credit Markets: The Role of the Credit Rating
Agencies, warns that differentiating between ratings would only
serve to further erode investor confidence and threaten an already
fragile economy.
"At a time when we need to restore liquidity and confidence in
the market, the last thing we ought to be doing is be making the
ratings process more complicated," said Kieran P. Quinn, CMB,
chairman of the MBA. "We recognize improving the ratings process is
a key to getting players back in the market, and we want to work
with Congress to find the best way to do that. This just isnt
it."
The letter recommends educating investors about the risk
associated with all securities, as opposed to focusing exclusively
on structured securities. The letter points out that the proposed
change would require investors to revise their investment
priorities and develop new processes to interpret the new ratings,
something that will hurt, not help, investor confidence.
"CMSA supports efforts to ensure the quality of credit ratings
but strongly opposes any proposals that would differentiate between
structured finance products and corporate and municipal bonds,"
said Dottie Cunningham, chief executive officer of CMSA. "CMSA
urges policymakers to proceed with caution and requests that
reforms be focused on investors and instilling confidence in our
already fragile markets."
To view a copy of the letter, please visit www.mortgagebankers.org
or www.cmbs.org.
