On July 30, the House Financial Services Committee approved H.R. 6308, the “Municipal Bond Fairness Act.” The bill would require nationally recognized statistical rating organizations (NRSROs) to “define clearly any rating symbol used by that organization” and “to apply such rating symbol in a consistent manner for all types of securities and money market instruments to which that symbol is assigned.” The bill responds to concerns raised by the Securities and Exchange Commission’s recently proposed new rule, Rule 17g-7, which would require NRSROs to either publish a report describing how the credit rating procedures for structured finance products differ from those of other types of rated instruments, or, as an alternative, would require NRSROs to use different rating symbols for structured finance products than those used for other types of rated debt securities.
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