Section 939 – Removal of Statutory References to Credit Ratings
SEC. 939. REMOVAL OF STATUTORY REFERENCES TO CREDIT RATINGS.
(a) Federal Deposit Insurance Act.--The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended--
(1) in section 7(b)(1)(E)(i), <<NOTE: 12 USC 1817.>> by striking "credit rating entities, and other private economic'' and insert "private economic, credit,'';
(2) in section <<NOTE: 12 USC 1831e.>> 28(d)--
(A) in the subsection heading, by striking "Not of Investment Grade'';
(B) in paragraph (1), by striking ``not of investment grade'' and inserting ``that does not meet standards of credit-worthiness as established by the Corporation'';
(C) in paragraph (2), by striking ``not of investment grade'';
(D) by striking paragraph (3);
(E) by redesignating paragraph (4) as paragraph (3); and
(F) in paragraph (3), as so redesignated--
(i) by striking subparagraph (A);
(ii) by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively; and
(iii) in subparagraph (B), as so redesignated, by striking "not of investment grade'' and inserting "that does not meet standards of credit-worthiness as established by the Corporation''; and
(3) in section 28(e)--
(A) in the subsection heading, by striking "Not of Investment Grade'';
(B) in paragraph (1), by striking "not of investment grade'' and inserting "that does not meet standards of credit-worthiness as established by the Corporation''; and
(C) in paragraphs (2) and (3), by striking "not of investment grade'' each place that it appears and inserting ``that does not meet standards of credit-worthiness established by the Corporation''.
(b) Federal Housing Enterprises Financial Safety and Soundness Act of 1992.--Section 1319 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4519) is amended by striking "that is a nationally recognized statistical rating organization, as such term is defined in section 3(a) of the Securities Exchange Act of 1934,''.
(c) Investment Company Act of 1940.--Section 6(a)(5)(A)(iv)(I) Investment Company Act of 1940 (15 U.S.C. 80a-6(a)(5)(A)(iv)(I)) is amended by striking "is rated investment grade by not less than 1 nationally recognized statistical rating organization'' and inserting "meets such standards of credit-worthiness as the Commission shall adopt''.
(d) Revised Statutes.--Section 5136A of title LXII of the Revised Statutes of the United States (12 U.S.C. 24a) is amended--
(1) in subsection (a)(2)(E), by striking "any applicable rating'' and inserting "standards of credit-worthiness established by the Comptroller of the Currency'';
(2) in the heading for subsection (a)(3) by striking "Rating or Comparable Requirement'' and inserting "Requirement'';
(3) subsection (a)(3), by amending subparagraph (A) to read as follows:
"(A) In general.--A national bank meets the requirements of this paragraph if the bank is one of the 100 largest insured banks and has not fewer than 1 issue of outstanding debt that meets standards of credit-worthiness or other criteria as the Secretary of the Treasury and the Board of Governors of the Federal Reserve System may jointly establish.''.
(4) in the heading for subsection (f), by striking "Maintain Public Rating or'' and inserting "Meet Standards of Credit-worthiness''; and
(5) in subsection (f)(1), by striking "any applicable rating'' and inserting ``standards of credit-worthiness established by the Comptroller of the Currency''.
(e) Securities Exchange Act of 1934.--Section 3(a) Securities Exchange Act of 1934 <<NOTE: 15 USC 78c.>> (15 U.S.C. 78a(3)(a)) is amended--
(1) in paragraph (41), by striking ``is rated in one of the two highest rating categories by at least one nationally recognized statistical rating organization'' and inserting "meets standards of credit-worthiness as established by the Commission''; and
(2) in paragraph (53)(A), by striking ``is rated in 1 of the 4 highest rating categories by at least 1 nationally recognized statistical rating organization'' and inserting "meets standards of credit-worthiness as established by the Commission''.
(f) World Bank Discussions.--Section 3(a)(6) of the amendment in the nature of a substitute to the text of H.R. 4645, as ordered reported from the Committee on Banking, Finance and Urban Affairs on September 22, 1988, as enacted into law by section 555 of Public Law 100-461, (22 U.S.C. 286hh(a)(6)), is amended by striking ``credit rating'' and inserting "credit-worthiness''.
(g) <<NOTE: 12 USC 24a note.>> Effective Date.--The amendments made by this section shall take effect 2 years after the date of enactment of this Act.
(h) Study and Report.--
(1) In general.--Commission shall undertake a study on the feasability and desirability of--
(A) standardizing credit ratings terminology, so that all credit rating agencies issue credit ratings using identical terms;
(B) standardizing the market stress conditions under which ratings are evaluated;
(C) requiring a quantitative correspondence between credit ratings and a range of default probabilities and loss expectations under standardized conditions of economic stress; and
(D) standardizing credit rating terminology across asset classes, so that named ratings correspond to a standard range of default probabilities and expected losses independent of asset class and issuing entity.
(2) Report.--Not later than 1 year after the date of enactment of this Act, the Commission shall submit to Congress a report containing the findings of the study under paragraph (1) and the recommendations, if any, of the Commission with respect to the study.