Nationally Recognized Statistical Ratings Organization

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Nationally Recognized Statistical Ratings Organization

A credit rating agency that the Securities and Exchange Commission in the United States uses for regulatory purposes. Credit rating agencies provide assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. Investments must receive a high rating from two or more nationally recognized statistical ratings organizations before banks in the United States may purchase them. There are 10 nationally recognized statistical ratings organization; Fitch, S&P, and Moody's are the three most prominent.
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The NAIC action is designed to reduce regulators' traditional reliance on nationally recognized statistical ratings organizations, and reflects a"loss of confidence" in the ratings that they produce for these securities, the association announced.
At issue is whether certified firms -- officially called Nationally Recognized Statistical Ratings Organizations (NRSROs) -- should be criticized for failing to meet the basic needs of investors.
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