US House panel backs credit rater regulation reform Wed Jun 14, 2006 3:41 PM ET WASHINGTON, June 14 (Reuters) - A U.S. congressional committee voted on Wednesday in favor of a bill to overhaul regulation of the $2.5-billion credit rating agency business. The bill, introduced last year by Republican Pennsylvania Rep. Michael Fitzpatrick, would set up a new regulatory framework for agencies that assess the creditworthiness of companies and governments that issue bonds and other debt. The measure was approved by a voice vote of the House of Representatives Financial Services Committee and forwarded to the full House for further consideration. Credit rating is dominated by a handful of companies, including McGraw-Hill Cos. <MHP.N> unit Standard & Poor's, Moody's Corp. <MCO.N> unit Moody's Investors Service, and Fimalac SA <LBCP.PA> unit Fitch Ratings. Smaller competitors have recently gained more recognition, including Canada's Dominion Bond Rating Service and A.M. Best Co., a specialist in the insurance business. Some small credit raters have complained for years they are handicapped because they have not been designated by the SEC as "Nationally Recognized Statistical Rating Organizations" (NRSRO). The Fitzpatrick bill would scrap the SEC's NRSRO designation system and allow credit rating agencies meeting certain standards to register with the SEC as "statistical rating organizations." It would also prohibit the SEC from intruding on the agencies' rating methodologies. Credit rater reform is on the agenda of the Senate Banking Committee, but there is no Senate bill at the moment. © Reuters 2006. All rights reserved.