[author: Steve Quinlivan]
The SEC staff has issued a report to Congress on credit rating standardization required by Section 939(h)(1) of the Dodd-Frank Act. The SEC staff recommended that the SEC not take any further action at this time with respect to:
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standardizing credit rating terminology, so that all credit rating agencies issue credit ratings using identical terms;
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standardizing the market stress conditions under which ratings are evaluated;
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requiring a quantitative correspondence between credit ratings and a range of default probabilities and loss expectations under standardized conditions of economic stress; and
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standardizing credit rating terminology across asset classes, so that named ratings correspond to a standard range of default probabilities and expected losses independent of asset class and issuing entity.
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