This was a vote on an amendment offered by Rep. Sessions (R-TX) to H.R. 4173, a major financial reform bill which implemented the most significant changes in the regulation of the financial industry since The Great Depression. The amendment would have eliminated a proposed new private right of legal action created in H.R. 4173 against credit rating agencies such as Standard & Poors and Moody’s. These agencies evaluate the financial strength of bonds and other investments and issue formal ratings on them for investors.

Speaking in support of his amendment, Sessions said that “the Securities and Exchange Commission is already handling regulatory disputes (involving the rating agencies) with no backlog, (but) this new provision allows trial lawyers to take regulatory enforcement into their own hands in the form of frivolous, unnecessary lawsuits. When it comes to a case of fraud, investors already have the right to sue credit rating agencies. This provision is completely unnecessary”. He claimed that the Democrats created this new private right to sue the rating agencies “to allow trial lawyers to run wild with enforcement capacities.”

Rep. Garrett (R-NJ) also spoke in favor of the amendment. He said that “bipartisan action taken by this Congress back in 2006 (created the) . . .Credit Rating Agency Reform Act (which) . . . formalized the registration process of credit rating agencies . . . What are we about to do here? Throw that out the window before it's fully implemented, before we fully have had the opportunity to see it roll out and be played out as Congress intended . . . .” He said that the language the amendment was seeking to remove will make it more difficult for the rating agencies “to make the evaluations that are necessary for the industry. That means it will be harder for credit to be obtained in the marketplaces, and what that means for businesses, of course, harder for them.”

Rep. Kanjorski (D-PA), opposed the amendment. He claimed that “if we had responsible activity by rating agencies we wouldn't have had the tremendous failure last year of so many securitized operations . . . because (rating agencies assigned) . . . 3-plus ratings to securities that didn't deserve it . . . Now, what we're doing here is saying . . .  If you want to put at risk investors, you will suffer the consequences and pay for your gross negligence.”

Rep. Capuano (D-MA) also opposed the amendment. He said the provisions creating this new private right are “absolutely essential . . . Without (them), credit rating agencies will not be held accountable for anything they do.” He also claimed that “the SEC has failed to do anything . . . Tell me the last time a credit rating agency was held accountable for giving a AAA rating to a piece of junk. Enron, junk bonds . . . they're never held accountable. All this says is they have to actually look at the books, they have to use anything they know, and they cannot be reckless about it . . . It doesn't say they're held accountable if they're wrong, nor should they be. A legitimate error is fine. All this says is they have to be held accountable to the American public when they basically don't do their job.”

The amendment was defeated by a vote of 172-257 along almost straight party lines.  One hundred and sixty-eight Republicans and four Democrats voted “aye”. Two hundred and fifty-two Democrats and five Republicans voted “nay”. As a result, the provisions creating a new private right of legal action against the rating agencies remained in the bill.