The Norman Transcript

Opinion

May 19, 2013

SEC should act on conflicts

NORMAN — Money talks. In the continuing dispute over the all-too-cozy relationship between the people who create and sell financial products and the people who rate their risk, the money says: Shut up and let us do what we want.

Minnesota Sen. Al Franken and Mississippi Sen. Roger Wicker — the first a Democrat, the second a Republican — are pushing the Securities and Exchange Commission to act on the myriad conflicts of interest in the ratings process. Specifically, they want the SEC to create a commission that would name the agencies that rate such investments as mortgage-backed securities.

The credit raters don’t want to eliminate the conflicts. Nor do the banks and brokerages.

They want to continue to have the people who create the packages of debt they intend to sell select their own raters, an arrangement that encourages the raters to rubber stamp pretty much everything as an AAA investment.

There is no incentive for a rater to conclude that a specific package is anything less than high-grade; do that, and the creator will simply find another rater who’ll be more accommodating.

That arrangement led during flash times to a sea of debt that was far more risky than anybody on the outside of the process realized — and whose massive collective failure underlay the financial meltdown of 2008 that created the Great Recession.

The raters and the creators have, and have always had, their own interests in mind. The SEC should be more interested in the common good, and the common good demands that the financial elites not be allowed to jeopardize the economy in pursuit of their short-term gain.

— The Mankato, Minn., Free Press

1
Text Only | Photo Reprints
Opinion
  • Dancing forward

    The official motto for Mike Fowler’s chairmanship of the Norman Chamber of Commerce is “Moving Norman Forward.” But after Thursday night’s annual banquet, the sub-theme should be, “Let’s Dance, Norman.” More than 500 chamber members and ...

    April 19, 2014

  • NRA members need to step up

    Please, Mr. Bloomberg, leave the checkbook open, but step away from the podium. Your efforts to curb gun violence and improve safety are notable. The National Rifle Association thanks you....

    April 19, 2014

  • Local control or not?

    Oklahoma lawmakers are a fickle bunch when it comes to issues of local control. Sometimes they want it and other times they do not....

    April 19, 2014

  • Norman should act wisely

    Editor, The Transcript: The fact that the city of Norman sells water for oil/gas drilling (or any other purpose) for less than half what they pay Oklahoma City when buying water, and while Norman residents are on rationing, is an act of ...

    April 18, 2014

  • There’s no need to fix system that’s working

    Lawmaker attempts to alter the way judges are selected are being challenged by the state’s lawyers. More than 1,800 signatures on a state bar association petition urging a “no” vote on Senate Joint Resolution 21 have been gathered in just ...

    April 18, 2014

  • On the side of openness

    Oklahoma Gov. Mary Fallin has been criticized for failing to release emails and other information sought by press outlets who believe it was covered under the state’s Open Records Act. Now, Fallin is coming down on the side of keeping the ...

    April 18, 2014

  • A raise for troopers, but what about others?

    Oklahoma Highway Patrol troopers could see an increase in their paychecks during the state’s next fiscal year, which begins in July....

    April 17, 2014

  • Fallin should help residents

    Editor, The Transcript: I see this week that our empty skirt of a governor asked the federal government (small business administration) for much money. She is concerned about the suffering of the business owners in Lexington and Purcell ...

    April 17, 2014

  • Top honors for NPS

    Top honors keep rolling in for both of Norman’s high schools. The district learned this past week that Norman High School and Norman North High School have been recognized as two of the most rigorous high schools in the country and in the ...

    April 16, 2014

  • Wind power bursting

    There are a few wind generators dotting the Norman skyline, but western and northwestern Oklahoma makes up for the deficit here. An industry group this week said Oklahoma ranks fourth nationally in the amount of wind-generated ...

    April 16, 2014