By Jonathan Stempel and Richard Barley
S&P, a unit of McGraw-Hill Cos
"The supposed reforms announced today by Standard & Poor's and by Moody's on Tuesday are too little, too late," New York state Attorney General Andrew Cuomo said in a statement. "Both S&P and Moody's are attempting to make piecemeal change that seem more like public relations window-dressing than systemic reform." He pledged to continue investigating their roles in the mortgage crisis.
This has contributed to write-downs piling up in the financial industry, hurting stock prices and causing losses in a variety of pension and mutual funds.
The agency will also periodically rotate analysts to ensure they do not get too close to the companies they rate, and review the work of analysts who leave S&P to join issuers they rated.
It also plans to flag structured finance ratings, to help distinguish them from corporate and government ratings. Many recent downgrades have affected mortgage- and asset-backed securities, and debt known as collateralized debt obligations.
REGULATORS
"The actions we are taking will serve the public interest by building greater confidence in credit ratings and supporting the efficient operation of the global credit markets, (and) minimize even the potential for perceived conflicts of interest, Deven Sharma, president of S&P, said in a statement.
S&P has not gone that far, but Executive Vice President Vickie Tillman said changes were needed.
On Wednesday, the International Organization of Securities Commissions said it might ban rating agencies from helping to design structured products that they also rate.
(Additional reporting by Ritsuko Ando and Dena Aubin in New York; Editing by Jonathan Oatis)
