Question

Explain the new guidelines for credit rating agencies resulting from the financial reform Act of 2010.

Answer 1

This is my answer

Due to conflict of interests, rating agencies are now longer allowed to be paid by the issuers of debt."

Subtitle C of the Finance Reform Act 2010. requires the SEC to establish "guidelines to prevent improper conflicts of interest arising from the performance of services unrelated to the issuance of credit ratings such as consulting, advisory, and other services."

The Act requires the Comptroller General of the United States to consider alternate methods of compensating Credit Rating Agencies for their rating services. In other words, Credit rating Agencies will no longer be paid by issuers of debt.

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