Credit Rating Agency Reform Act

The Credit Rating Agency Reform Act is a law that was passed by Congress and signed by the President in 2006. It was designed to make sure that the credit rating agencies—companies that rate the safety or credit-worthiness of loans and other investments—are doing their jobs in an accurate and fair way. The law requires the agencies to follow certain rules and procedures that make sure the ratings they give to loans and investments are what the borrowers and investors can trust. It also makes sure the agencies are not influenced by anyone who may have a financial interest in the loan or investment. This helps to protect borrowers and investors from getting bad information. The law requires the credit rating agencies to disclose their methods and procedures so they can be checked by the government and the public. The law also makes sure that the rating agencies are held accountable if they make mistakes. This makes sure that borrowers and investors can trust the ratings they receive and that the rating agencies won't get away with giving bad advice.