Are ABS Credit Ratings = Free Speech?

Abstract

Credit rating agencies have long held that their credit ratings (their speech) are opinions, which ought to benefit from the privileges afforded to journalists under the First Amendment. However, in the realm of structured finance, both the nature of the relationship between the issuers and credit rating agencies, and the application of the existing ratings processes themselves, may jeopardize the First Amendment protections that the rating agencies would otherwise enjoy. This article examines those relational and procedural elements which, if unattended to, leave structured finance ratings vulnerable to being considered commercial speech, a move that could render the provision of structured finance credit ratings more expensive.

TOPICS: Information providers/credit ratings, legal and regulatory issues for structured finance