15 U.S.C. § 78o–9 — Study and rulemaking on assigned credit ratings

(a) Definition. In this section, a "structured finance product" means an asset-backed security, as defined elsewhere in the securities laws, plus any structured product based on an asset-backed security that the SEC decides counts, by rule. (b) Study. The SEC must study: the process for rating structured finance products and the conflicts of interest built into both the "issuer-pay" model (where the rated company pays for its own rating) and the "subscriber-pay" model (where ratings users pay instead); whether it's workable to set up a system where a public or private utility, or a self-regulatory organization, assigns which NRSRO rates a given structured finance product — including how fees for that NRSRO would be figured out and paid, whether the federal government would be seen as creating "moral hazard" by running such a system, and any constitutional or other legal problems with it; what range of measurements could gauge how accurate credit ratings really are; and other ways to pay NRSROs that would reward them for accuracy. (c) Report and recommendation. Within 24 months of July 21, 2010, the SEC must send a report to the Senate Banking, Housing, and Urban Affairs Committee and the House Financial Services Committee. The report must contain the study's findings and any recommendations for new rules or new legislation to act on those findings. (d) Rulemaking. After it submits that report, the SEC may — if it decides doing so serves the public interest and protects investors — create by rule a system for assigning which NRSRO gives the initial rating to a structured finance product and monitors it afterward, built so the issuer, sponsor, or underwriter of the product cannot pick the NRSRO themselves. In writing that rule, the SEC must carefully consider a specific proposal (the one that would have become § 15E(w) under a provision from a 2010 Senate-passed bill) and must use that proposed system unless it decides a different system would better serve the public and protect investors. Nothing in this subsection limits any other rulemaking power the SEC already has.