AFP President Jim Kaitz Calls for Increased Competition Among Credit Rating Agencies in Capitol Hill Testimony

BETHESDA, MD -- APRIL 2, 2003 -- The Association for Financial Professionals' (AFP) President and Chief Executive Officer Jim Kaitz called for greater competition among credit rating agencies in testimony today before the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises in Washington, D.C.  The hearing, "Rating the Rating Agencies: the State of Transparency and Competition," centered on the role and function of credit rating agencies and their regulation by the Securities and Exchange Commission (SEC).

Kaitz spoke on behalf of the 14,000 member association that released a survey on credit rating agencies in November 2002. Survey results showed that a significant number of respondents do not believe their companies' ratings or the ratings of the companies in which they invest are accurate or timely. Respondents also called on the SEC to increase the oversight of rating agencies and increase the number of recognized agencies.

"AFP believes that credit rating agencies are vital to the efficient operation of capital markets," said Kaitz. "We hope that efforts such as this hearing will bring to light opportunities to increase competition in the market for credit ratings and improve the quality of the information provided by credit rating agencies for the benefit of debt issuers and investors in the securities markets."

Survey results found that many of AFP members believe that:

• The information provided by credit rating agencies is neither timely nor accurate;
• The rating agencies are primarily serving the interest of parties other than investors; and
• The SEC should increase its oversight of rating agencies and takes steps to foster greater competition in the market for credit rating information.

Since AFP's survey, the SEC has recognized Dominion Bond Rating Service as a fourth Nationally Recognized Statistical Rating Organization (NRSRO). "This is an important first step toward realizing the benefits of increased competition envisioned by AFP members," Kaitz said.

The Association for Financial Professionals in Bethesda, Maryland, supports more than 14,000 individual members from a wide range of industries throughout all stages of their careers in various aspects of treasury and financial management. AFP is the preferred resource for financial professionals for continuing education, financial tools and publications, career development, certifications, research, representation to legislators and regulators, and the development of industry standards.