in effect on the date of enactment of this Act’’ and insert-
ing ‘‘, including NRSRO asset-backed securities approved 
by the Commission and listed in such section’’. 
(b) REVISION OF REGULATIONS.—Not later than 180 
days after the date of enactment of this Act, the Securities 
and Exchange Commission shall revise the regulations in 
section 1101(c) of part 229 of title 17, Code of Federal 
Regulations, relating to the term ‘‘asset-backed securities’’ 
for purposes of section 3(a)(62)(B)(iv) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(62)(B)(iv)). The 
revisions required under this subsection shall— 
(1) define a subset of asset-back securities to be 
referred to as ‘‘NRSRO asset-backed securities’’, 
which shall be the only asset-backed securities for 
which a credit rating agency may register and issue 
ratings as a nationally recognized statistical rating 
organization and, which shall be restricted to securi-
ties representing interests in pools of assets whose 
performance can be evaluated based on a docu-
mented history of predictable performance of similar 
assets and which are contained in structures which 
also have a documented history of predictable per-
formance; and 
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(2) include a list of the classes of securities ap-
proved as NRSRO asset-backed securities pursuant 
to subsection (c). 
Nothing in this subsection shall be construed so as to limit 
any credit rating agency from rating asset-backed instru-
ments which are not designated as ‘‘NRSRO asset-backed 
securities’’ so long as such credit rating agency makes it 
explicit that such instruments are not NRSRO asset- 
backed securities and the associated ratings are not issued 
pursuant to its status as a nationally recognized statistical 
rating organization. 
(c) APPROVAL
PROCESS
FOR
NRSRO ASSET- 
BACKED SECURITIES CLASSES.— 
(1) INITIAL FAST-TRACK APPROVAL.—Not later 
than 90 days after the date of enactment of this 
Act, the Securities and Exchange Commission shall 
establish an initial list of classes of securities ap-
proved as NRSRO asset-backed securities. 
(2) SUBSEQUENT
APPROVAL.—After the ap-
proval of the initial list of classes of NRSRO asset- 
backed securities under paragraph (1), the Commis-
sion shall approve additional classes of asset-backed 
securities as NRSRO asset-backed securities on an 
ongoing basis. 
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(3) PROCEDURE.—The Commission shall ap-
prove a securities class as NRSRO asset-backed se-
curities only— 
(A) upon the application (in such form de-
termined by the Commission) of a nationally 
recognized statistical rating organization con-
cerning a specific class of asset-backed securi-
ties; 
(B) after receiving comment from Federal 
and State regulators of institutions or entities 
reasonably expected to seek funding from or in-
vest in such class of securities, including the 
Federal Reserve System, the Office of the 
Comptroller of the Currency, the Office of 
Thrift Supervision, the Federal Deposit Insur-
ance Corporation, the Pension Benefit Guar-
anty Insurance Corporation, and State banking 
insurance authorities; and 
(C) after any other investigation and due 
diligence the Commission determines to be nec-
essary to evaluate the proposed NRSRO asset- 
backed securities class’s compliance with the 
standards described in paragraph (4) prior to 
granting their approval. 
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(4) STANDARDS
FOR
APPROVAL
OF
NRSRO 
ASSET-BACKED SECURITIES.—Approval of a class of 
securities as an NRSRO asset-backed securities 
class shall be limited to those securities whose future 
performance meets the standard of ‘‘reasonably pre-
dictable’’. At a minimum, a determination of a rea-
sonably predictable performance standard shall re-
quire— 
(A) a sufficient history of performance 
data, from a diverse base of sponsors spanning 
at least 1 complete economic cycle for both the 
collateral assets or reference assets and the 
structure so as to generate reasonably accurate 
statistical estimates of future performance; 
(B) the ability to aggregate pools of the 
collateral assets or reference assets of sufficient 
size to generate reasonably accurate statistical 
estimates; 
(C) the existence of contracts for such col-
lateral asset product which are sufficiently 
standardized to generate reasonably accurate 
statistical estimates; and 
(D) sufficient standardization of service 
quality and procedures for such collateral asset 
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product to generate reasonably accurate statis-
tical estimates. 
Securities that fail to meet 1 or more of conditions 
set forth in subparagraphs (A) through (D) shall not 
qualify for eligibility as NRSRO asset-backed securi-
ties or ratings. 
SEC. 2. QUALIFICATIONS FOR REGISTRATION. 
Section 15E of the Securities Exchange Act (15 
U.S.C. 78o–7) is amended— 
(1) in subsection (c), by redesignating para-
graph (2) as paragraph (3) and inserting after para-
graph (1) the following: 
‘‘(2) REVIEW OF RATINGS AND COOPERATION 
WITH COMMISSION.—In order to maintain its reg-
istration and the integrity of the NRSRO ratings 
system, a nationally recognized statistical rating or-
ganization shall annually review all ratings issued 
and outstanding in obligor categories for which it 
has registered, with such review to result in a formal 
re-rating affirmation, upgrade, downgrade or ratings 
removal. Each nationally recognized statistical rat-
ing organization shall provide the Commission with 
full access to models, documentation, assumptions 
and performance data upon request, shall answer all 
questions and queries posed by Commission on a 
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timely basis, and otherwise cooperate with any Com-
mission investigation.’’; 
(2) in subsection (d), by striking ‘‘The Commis-
sion’’ and inserting 
‘‘(1) IN GENERAL.—The Commission’’; 
(3) by redesignating paragraphs (1) through 
(5) as subparagraphs (A) through (E), respectively; 
and 
(4) by adding a new subparagraph (F) as fol-
lows: 
‘‘(F) has, in the course of an investigation 
into the integrity of its NRSRO ratings caused 
the Commission to believe that a suspension or 
revocation of its NRSRO registration is in the 
public interest.’’. 
(5) by adding at the end the following: 
‘‘(2) DETERMINATION
AND
EXAMINATION
BY 
COMMISSION.—In assessing whether a nationally rec-
ognized statistical rating organization is consistently 
producing credit ratings with integrity for purposes 
of paragraph (5), the Commission shall determine 
whether ratings are issued with the expectation of 
meeting aggregate historical loss and default stand-
ards for given ratings levels across all categories for 
which a credit rating agency has registered under 
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this section. In the case of a nationally recognized 
statistical rating organization which has registered 
for a category or categories for which its ratings ex-
perience covers less than a full economic cycle, the 
standards shall be consistent with industry norms 
for such category or categories. Additionally, as part 
of the ongoing qualification of NRSROs, adherence 
to the foregoing provisions shall be evaluated 
through the Commission’s regular surveillance of 
NRSRO models, systems, assumptions and perform-
ance.’’. 
Æ 
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