March, 17, 2010

That, in short, is the regimen prescribed by both the House and the Senate bills proposing a regulatory overhaul of the banking and financial industries, Edward Wyatt reports in The New York Times.Rather than immediately putting in place regulatory fixes for some of the problems that contributed to the financial crisis, the two bills each call for dozens of studies that will effectively delay for up to two years the possibility of addressing those problems through new laws or industry regulations.

Overly optimistic credit ratings and investors’ dependence on the credit rating agencies, for example, were shown to have contributed to the subprime mortgage mess. But the Senate and House bills call for four to six separate studies of up to 30 months’ duration of how credit ratings agencies work, how they are compensated and what can be done to make their ratings more relevant to investors.

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