Jules Kroll, a former private investigator who started a bond-rating company after the financial crisis, said the largest credit-rating firms are again putting profits ahead of accuracy amid record demand for corporate debt.
The main trade association for the securitization industry is in turmoil after most of the board resigned in a dispute with the group’s executive director over governance and bonuses, according to six people with knowledge of the matter.
Bank of America Corp., Citigroup Inc. and Morgan Stanley are among more than 20 companies forming a trade organization after some members defected this month from the existing American Securitization Forum.
Pacific Investment Management Co. is quitting the American Securitization Forum after the trade group declined to issue a statement about investors’ views on the nationwide foreclosure settlement this month by five banks, two people with knowledge of the matter said.
The American Securitization Forum, the trade group thrown into turmoil this month after most of its board quit in a dispute with its executive director, took its first public action since the defections, sending a comment letter to the Basel Committee on Banking Supervision.
The U.S. financial-regulation bill may halt the already diminished market for asset-backed securities by increasing liability risk for credit raters, a securitization-industry group and bank analysts said.
U.S. regulators should exempt securitization vehicles from Dodd-Frank Act rules slated to take effect this year to avoid hampering the market for asset-backed securities, according to an industry lobby group.