Tom Deutsch, executive director of the American Securitization Forum, participated in a Securities and Exchange Commission roundtable Tuesday, announcing his opposition to the Franken Amendment.
The amendment would create an independent board to choose which credit-rating firms rate structured-debt deals.
The ASF fears if such a board was created it would be subject to political pressure to adjust its ratings to favor a specific agenda such as increased homeownership in particular segments of the country or access for certain borrowers to credit.
The securitization trade advocacy group also questioned the methodology that would be implemented in rating such deals.
Another concern includes the evaluation of determining if the board is working for the market, such as in cases where the market does not approve of the ratings being assigned and whether investors would be forced to accept the board's assessment in place of their own.
"In this respect, we believe targeted, incremental reforms are much better policy options than a radical overhaul of the ratings process," Deutsch said.
He added, "We believe that a framework such as Rule 17g-5, in which a rating agency is permitted to offer an opinion as a supplement to, rather than a replacement for, other rating agencies, could provide helpful alternative perspective and credibility without disrupting the availability or efficiency of credit to consumers."