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

Regulation is necessary to overcome perverse incentives and ensure the quality of corporate governance ratings, which are important to institutional investors, managers, and their clients.

One of the many requirements of the Dodd-Frank Act is that all federal agencies must remove references to and reliance on credit ratings from their regulations and replace them with alternative methods for evaluating creditworthiness. 

As a result of the subprime mortgage turmoil there has been considerable focus in the last year on the role of credit rating agencies in determining the risk or quality ratings on mortgage-backed securities. In this statement, the Shadow Financial Regulatory Committee examines some of the underlying structural problemsof credit rating agencies.

Steps should be taken to increase competition in the rating industry, which would increase customer choice, price competition, innovation, and the analysis available to investors.

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

The world is becoming increasingly scary at the very time that the military will be facing 20% reductions. With each passing day, the world closes in; with each passing day, our ability to manage that world degrades.

Micromanagement of capital standards is no substitute for a regulatory process that encourages banks and bank debtholders to measure risk exposures properly.