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House Dems target Senate's credit ratings panel

By Kevin Drawbaugh

WASHINGTON (Reuters) - House Democrats on Monday moved to kill a Senate plan to shake up the credit rating agency business, a key part of a landmark Wall Street reform bill that will be debated on Tuesday.

Setting up potential fireworks at the second meeting of a Senate-House panel drafting the bill, Representative Barney Frank proposed dropping the Senate's plan to create a new government panel to deal with credit rating agencies.

As proposed by Democratic Senator Al Franken and approved last month by the Senate, the new panel would assign ratings responsibilities for new structured securities to ratings agencies on a semi-random basis.

The plan aims to address perceived conflicts of interest that arise in the existing credit rating agency business model in which debt issuers pay the agencies for ratings. Critics say that leads to overly rosy assessments by the agencies because they want to keep the issuers' business.

The issue affects agencies such as Moody's Corp, Standard & Poor's and Fitch Ratings.

Frank, the chairman of the Senate-House conference committee, said House Democrats want a one-year Securities and Exchange Commission study of the issue instead.

House Democrats also want to strike from the bill a Senate provision that would exempt private equity funds from having to register with the SEC, as hedge funds will have to do under bills approved by both chambers, Frank said.

In addition, he said the House wants to set a $150-million minimum assets-under-management threshold for hedge funds and other private funds that must register with the SEC, instead of the Senate's proposed threshold of $100 million.

(Editing by James Dalgleish)