London, 2 February 2012

James Gellert, the CEO of independent ratings, research and analytics firm Rapid Ratings, will be testifying at the House Committee on Financial Services hearing on the collapse of MF Global, today, February 2, alongside S&P and Moody’s. Please find his testimony on the subcommittee website here: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=276489

Gellert’s testimony highlights Rapid Ratings’ high-risk rating of MF Global in 2009, years before the other ratings agencies (page 2-3), in addition to discussing the inherit conflicts of interest in the Big Three ratings agencies’ business model that may have contributed to their late action (pages 4-5).

It also discusses a new bill sponsored by Congressman Mike Fitzpatrick (R-Pa), that would require Nationally Recognized Statistical Ratings Organizations (NRSROs), such as the Big Three, to submit a quarterly affirmation to the SEC declaring that their ratings are “accurate based on the organization’s latest procedures and methodologies as applied to the most recently available data.” In short, this bill would make ratings firms, for the first time, explicitly state that they stand by their product.

The Big Three have repeatedly and systematically failed to provide early warnings for some of the biggest financial disasters in history — MF Global is a prime example — and this simple, consistent call for quality assurance is certainly more than reasonable.

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