Joe Nocera says the financial regulation bill is way too weak. He makes some okay points, but this error doesn’t increase my confidence in his overall judgment:
The solution [to the ratings agency problem] should be obvious, shouldn’t it? Just get rid of that special government status — and stop writing regulations that revolve around ratings. Believe it or not, S.& P. is in favor of such a solution. So why isn’t it in the bill? Because all those money market and pension funds much prefer the crutch provided by the ratings — that way, if anything goes wrong they can simply say “It was the rating agency’s fault.” And they’re the ones Congress listened to.
In fact the House bill contains language that more-or-less does this (“get rid of that special government status” isn’t operational legislative language) and the LeMieux Amendment that was added to the Senate bill does the same thing. These measures are open to criticism, but to raise the issue and then simply assert that congress failed to act is wrong.