It was a busy year for rating agency reform in 2009, with multiple rulemaking actions by the US Securities and Exchange Commission (the Commission) covering diverse topics. The table below briefly summarizes the action during the year with respect to new rules and proposals that are likely to directly affect issuers, sponsors or underwriters (collectively referred to below as arrangers) of asset-backed securities (ABS), including mortgage-backed securities (MBS). We also separately summarize other new or proposed rules relating to internal conduct of nationally recognized statistical rating organizations (NRSROs), compliance, reporting and similar matters.

The Credit Rating Agency Reform Act of 2006 empowered the Commission to regulate NRSROs. The Commission adopted initial rules for this purpose in June 2007. Insofar as the rules discussed below regulate the conduct of NRSROs, those rules are further exercises of the Commission’s power under the 2006 Act and build on the initial 2007 rules. The rules discussed here are separate from the risk assessment procedures adopted by the Federal Reserve Bank of New York (the New York Fed) under the Term Asset-Backed Securities Loan (TALF) Facility for non-mortgage ABS.1

New or Proposed Rules That Affect Arrangers

For each of the new or proposed rules that seem likely to have a direct impact on arrangers, we have briefly summarized the rule, indicated its status and footnoted an online location for the relevant Commission release.

Click here for table

Other New and Proposed Rules Relating to NRSRO Conduct

In February8 and December9 releases, the Commission adopted rules relating to conflicts of interest10, expanded recordkeeping11, disclosure12 and reporting13 requirements for NRSROs. In December14, the Commission proposed additional rules (or amendments to existing rules) that would require NRSROs to furnish a new annual compliance report, disclose additional information about the sources of their revenues and make publicly available a consolidated report containing information about revenues of the NRSRO attributable to persons paying the NRSRO for the issuance or maintenance of a credit rating.