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WASHINGTON - THE Securities and Exchange Commission (SEC) plans to propose rules that may diminish the traditional weight credit ratings carry in many markets, The Wall Street Journal reported online on Tuesday.
The shift would target markets including the '3.4 trillion-dollar money-market industry, in the latest blow to the rating business stemming from the credit crunch,' the Journal said.
Rules to be proposed Wednesday 'would make it possible for US money-market funds to invest in short-term debt without regard to ratings put on those securities by firms such as Moody's Investors Service and Standard & Poor's,' the Journal said, citing unnamed people familiar with the matter.
The big three credit rating agencies, Standard & Poor's, Moody's Investors Service and Fitch, recently agreed to reform their practices in an agreement with New York state Attorney General Andrew Cuomo.
Securities portfolios, especially those holding securities tied to US subprime home loans, have endured vast multi-billion-dollar losses in the past year and played havoc with banks' wider finances.
SEC reforms were looming as the credit crunch continues to jolt Wall Street. Some analysts say ailing mortgage-backed securities, which have slumped in value amid a lengthy housing market downturn, have exacerbated the credit squeeze.
The ratings assigned to investment portfolios and the banks holding them often determine whether other parties will trade with the banks. They can even impact a bank's share price. -- AFP
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