Credit rating agencies need review board.

• Position: Business & Finance

The establishment of a review board should be the top priority for regulators seeking to eliminate the conflicts of interest inherent in today's credit rating agencies, according to Weiss Ratings, Inc., Jupiter, Fla., an independent provider of ratings and analyses of financial services companies, mutual funds, and stock.

"Regulators should take swift action to implement policies and procedures that will ensure oversight of an industry whose flawed business model has failed to protect the interests of investors over those of the rated companies," insists Bruce R. Fador, president and chief executive officer of Weiss.

In light of recent Congressional hearings calling for the Securities and Exchange Commission (SEC) to initiate regulation that addresses the conflicts of interest found among credit rating agencies, or nationally recognized statistical rating organizations (NRSROs), Weiss has made the following recommendations to the SEC:

* Establish a review board to evaluate and compare the track record of each NRSRO. Results should be disclosed to the public on a regular basis.

* A formal complaint procedure needs to be instituted so that rated companies can report any instances of perceived pressures by NRSROs.

* Remove "Regulation FD" exclusion so that relevant nonpublic information is made readily available by NRSROs...