Dodd's bill includes 'Volcker rule,' ability to sue credit-rating agencies

A couple of pieces of news emerged from the summary sheet of Sen. Chris Dodd's (D-Conn.) sprawling financial industry regulation reform bill, which he rolled out today. Most of what is included was anticipated.

But there were a couple of pieces of news:

The bill includes the "Volcker rule." The Volcker rule, named for former Fed chair Paul Volcker, one of President Obama's top economic advisers, would prohibit banks that have access to taxpayer money from engaging in speculative activities, such as hedge funds.

For the first time, credit-rating agencies can be sued "for a knowing or reckless failure to conduct a reasonable investigation of the facts or to obtain analysis from an independent source," according to Dodd's bill. The big credit-rating agencies -- Standard & Poor's, Fitch and Moody's -- took a lot of heat for giving high-level ratings to bad products, such as mortgage-backed securities, based on sub-prime mortgages.

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By Frank Ahrens | March 15, 2010; 3:24 PM ET
Categories: Congress , The Ticker , Wall Street | Tags: Volcker Rule, chris dodd
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Dodd's bill includes 'Volcker rule,' ability to sue credit-rating agencies