Press Releases

Professor Lawrence White Testifies Before the Senate on the Regulation of Credit Rating Agencies

On August 5, 2009, NYU Stern Professor Lawrence White testified before the US Senate Committee on Banking, Housing and Urban Affairs during a hearing on “Examining Proposals to Enhance the Regulation of Credit Rating Agencies.”

“[The] urge for greater regulation is understandable – but it is misguided and potentially quite harmful,” explained Professor White. “The heightened regulation of the rating agencies is likely to discourage entry, rigidify a specified set of structures and procedures, and discourage innovation in new ways of gathering and assessing information, new technologies, new methodologies and new models – and may well not achieve the goal of inducing better ratings from the agencies.”

An advocate for increased competition, he proposed the following:

  • Eliminate regulatory reliance on ratings
  • Eliminate the force of law that has been accorded to these third-party judgments
  • Bring market forces to bear
Read Prof. White's full testimony