When things are going well, the government seems to leave well adequate alone. But, after credit ratings operations like S&P and Fitch missed the mark badly on their analysis of subprime financial instruments, the SEC may want a hand in how the firms function.

As the heart program being reviewed by the SEC is a plan to grade past ratings from the credit agencies to see whether they were accurate. sign it a report card. According to The Wall Street Journal (subscription required), SEC Chairman Christopher Cox said the potential rules “would require credit-rating agencies to compose disclosures surrounding past ratings in a format that would improve the comparability of

track records and promote competitive assessments of the accuracy of past ratings.”

Getting all of the details about how the companies grade securities and comparing past ratings to how securities actually performed is an excellent view. It is not unlike looking at how a securities analyst has done with his or her ratings of stocks.

The problem with the credit ratings agency program now is that it has no basis in accountability. Changing that is the key to improvement.

Douglas A. McIntyre is an editor at 247wallst.com.

Original post by Douglas McIntyre

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