Ratings Not In Compliance With SEC Regulation?

The Accountability and Transparency of Rating Act (SEC. 6001. Short Title) has a section entitled: Transparency of Credit Rating Methodologies and Information Reviewed.  Subsection (H) states: “information on the content of the credit rating including — (i) the expected default probability; and (ii) the loss given default.”  The regulation expands the definition of rating to include these two important factors.  Smith’s Gradings have always included default and loss given default PLUS event risk gradings.   However, the Rating Agencies have never included an expectation of loss and the Ratings are currently not in compliance with the SEC’s Rule?


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