Here is another good news/bad news column about the 112th Congress.

A controversial dimension of the financial crisis has been the role of credit ratings and the perverse incentives facing rating organizations.

End the government-sponsored cartel in credit ratings.

In the housing and mortgage bubble of the twenty-first century, the government sponsored credit rating agencies turned out to be a notable weak spot.

The Shadow Committee believes that the best approach to the reform of credit rating organizations is to remove ratings from the regulatory process. If that is not done, then a minimal reform would be to mandate that the SEC's regulatory use of ratings be made conditional on the achievement by individual rating agencies of objective performance benchmarks.

The major credit rating agencies have been widely criticized for their role in the international bust and liquidity panic in the markets for structured mortgages and other complex securities. Critics continue to question the effectiveness of rating agency performance, incentives, and oversight. Currently, numerous regulations mandate that investors use credit...

Awritten comment submitted to the Securities and Exchange Commission with regard to oversight of credit rating agencies, File No. S7-04-07.