Many investors have lost faith in the major rating agencies and critics argue that S&P, Moody’s and others were slow to downgrade risky securities and companies that were tied to subprime loans and other exotic assets, reports CNNMoney.
Treasury Secretary Timothy Geithner and Director of the National Economic Council, Lawrence Summers, said that the administration will seek to “reduce investors’ and regulators’ reliance on credit-rating agencies.”
John Mitchell, co-manager of the Manning & Napier Financial Services fund, which owns shares of both companies, said he thinks much of the concerns about regulation are already priced into both stocks. He called a switch to a model where investors pay for ratings the “worst-case scenario for the industry” but added he didn’t think that would happen.