On July 15, 2010, the Senate passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed by the House of Representatives on June 30th. The President has indicated that he will sign the bill that has now passed both of the Houses.

The legislation covers a wide variety of topics in an effort to address the causes of the recent financial crisis. With regard to credit rating agencies, the legislation covers the following topics: increased accountability, internal controls to avoid conflicts of interest and to better ensure the accuracy of ratings, elimination of reliance on ratings by federal agencies, and public disclosure of the information on which ratings are based to allow investors and other users to evaluate accuracy and to compare the performance of different agencies.

As indicated in our complete summary, many of the requirements to be imposed have been left by Congress to regulations to be prescribed by the SEC and many actions that had been proposed in Congress have been relegated to studies to be conducted over the next several years. Generally, the SEC is required to issue final regulations with regard to credit rating agencies within one year of the date the legislation is enacted.