[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2549 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 2549

  To ensure uniform and accurate credit rating of municipal bonds and 
     provide for a review of the municipal bond insurance industry.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 21, 2009

   Mr. Capuano (for himself, Mr. Maffei, Mr. Kanjorski, Mr. Frank of 
   Massachusetts, Mr. Cleaver, Mr. Baca, Mr. Moran of Virginia, Mr. 
 Andrews, and Mr. Connolly of Virginia) introduced the following bill; 
       which was referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
  To ensure uniform and accurate credit rating of municipal bonds and 
     provide for a review of the municipal bond insurance industry.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Municipal Bond Fairness Act''.

SEC. 2. PRESERVATION OF AUTHORITY TO PREVENT DISCRIMINATION.

    Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
7) is amended--
            (1) by redesignating subsection (p) as subsection (q); and
            (2) by inserting after subsection (o) the following new 
        subsection:
    ``(p) Ratings Clarity and Consistency.--
            ``(1) Commission obligation.--Subject to paragraphs (2) and 
        (3), the Commission shall require each nationally recognized 
        statistical rating organization that is registered under this 
        section to establish, maintain, and enforce written policies 
        and procedures reasonably designed--
                    ``(A) to establish and maintain credit ratings with 
                respect to securities and money market instruments 
                designed to assess the risk that investors in 
                securities and money market instruments may not receive 
                payment in accordance with the terms of issuance of 
                such securities and instruments;
                    ``(B) to define clearly any rating symbol used by 
                that organization; and
                    ``(C) to apply such rating symbol in a consistent 
                manner for all types of securities and money market 
                instruments.
            ``(2) Additional credit factors.--Nothing in paragraph 
        (1)(A), (B), or (C)--
                    ``(A) prohibits a nationally recognized statistical 
                rating organization from using additional credit 
                factors that are documented and disclosed by the 
                organization and that have a demonstrated impact on the 
                risk an investor in a security or money market 
                instrument will not receive repayment in accordance 
                with the terms of issuance;
                    ``(B) prohibits a nationally recognized statistical 
                rating organization from considering credit factors 
                that are unique to municipal securities that are not 
                backed by the issuer's full faith and credit in its 
                assessment of the risk an investor in a security or 
                money market instrument will not receive repayment in 
                accordance with the terms of issuance; or
                    ``(C) prohibits a nationally recognized statistical 
                rating organization from using an additional symbol 
                with respect to the ratings described in paragraph 
                (1)(A) for the purpose of distinguishing the ratings of 
                a certain type of security or money market instrument 
                from ratings of any other types of securities or money 
                market instruments.
            ``(3) Complementary ratings.--The Commission shall not 
        impose any requirement under paragraph (1) that prevents 
        nationally recognized statistical rating organizations from 
        establishing ratings that are complementary to the ratings 
        described in paragraph (1)(A) and that are created to measure a 
        discrete aspect of the security's or instrument's risk.
            ``(4) Review.--
                    ``(A) Performance measures.--The Commission shall, 
                by rule, establish performance measures that the 
                Commission shall consider when deciding whether to 
                initiate a review concerning whether a nationally 
                recognized statistical rating organization has failed 
                to adhere to such organization's stated procedures and 
                methodologies for issuing ratings on securities or 
                money market instruments.
                    ``(B) Consideration of evidence.--Performance 
                measures the Commission may consider in initiating a 
                review of an organization's ratings in each of the 
                categories described in clauses (i) through (v) of 
                section 3(a)(62)(B) during an appropriate interval (as 
                determined by the Commission) include the transition 
                and default rates of its in discrete asset classes.''.

SEC. 3. IMPLEMENTATION.

    The Securities and Exchange Commission shall prescribe rules to 
implement the amendments made by section 101 within 270 days after the 
date of enactment of this Act.
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