The clerk has called the roll on the Franken amendment, which would end the conflict of interest in the rating agency process by creating a new agency in the SEC to assign initial ratings of securities. Earlier, Senate Banking Committee chair Chris Dodd came out against the measure, fearing unintended consequences from it. Defending the “crackdown” on the credit rating agencies in the base bill – which really don’t amount to much, and by Dodd’s own admission don’t get rid of the conflict of interest – Dodd said “I like the idea where it’s (the Franken amendment) going, but I don’t know if it’s sound.” He preferred more study (great, a study, where good intentions go to die) of the problem.

The amendment still has a shot at passage, with members of the Banking Committee like Tim Johnson and Chuck Schumer supporting, as well as at least two Republicans, Roger Wicker and Chuck Grassley. We’ll have to see.

…Carl Levin closed out debate by reading some of the emails gleaned from his Permanent Subcommittee on Investigations about the rating agencies clearly trading triple-A ratings for the promise of more business and more money. Just so you understand which side people are on who vote against this amendment.

…The problem of the rating agencies is precisely what Andrew Cuomo is investigating in New York right now.

…OK, I think this thing may pass. Snowe, Graham, Ensign, Murkowski, Grassley and Wicker have voted for it, and among Democrats, so far we only have Dodd and Bayh against.

…Thad Cochran (R) just voted for it. Jack Reed voted against. Scott Brown voted for it.

…I still think it’s ahead. Ben Nelson and Lieberman voted no, but Webb voted yes. Inouye, Akaka, Johnson, Stabenow, Kaufman, Begich, Kerry all voted yes, and with the eight Republicans in the yes column, I don’t think it’ll be defeated on a majority vote. We shall see in a minute.

…Crapo and Risch just voted for this, making it 10 Republicans. Susan Collins voted no, but Blanche Lincoln and Arlen Specter voted yes. This is passing.

…Collins just changed her vote to aye at the last second, which is how you know something has won and the Senator wants to be on the right side of it. This is going into the bill. That’s pretty incredible.

…Final tally: 64-35. The amendment passes and pretty easily. Wow, what a great victory for Al Franken and a real substantive change to the financial industry. Fantastic.

UPDATE: Wow, the Senate must hate the rating agencies. Moments ago, they passed the LeMieux amendment. Here’s what it does:

The senator introduced an amendment to remove the federal government’s ‘seal of approval’ from investment rating agencies.

“There is a handful of federally-approved rating agencies that gave their top marks to some of the worst investments. Those stellar ratings made bad investments seem sound, up until when they crashed the markets,” said LeMieux. “An investment rating should mean something, but today it doesn’t. Removing their federal endorsement will end the dangerous over-reliance on these ratings and allow sound measures of risk to re-emerge in the marketplace-giving investors confidence an investment’s true risk is known.”

This will foster a lot of competition among rating agencies, it seems. The rating agency oligarchy could be over (of course, this all has to get through conference).