Regulatory changes are needed in the bond insurance industry.

While regulation of the bond insurance industry officially is the job of various state insurance departments, the rating agencies have played a quasi-regulatory role in this regard. For many years, the rating agencies have acted as the de facto regulator of the financial guaranty industry and until recently that oversight authority has not been seriously called into question. However, the current credit crisis is leading many to rethink the regulatory framework across Wall Street, including that of the financial guaranty industry.

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