By Cydney Posner

Credit rating agencies, such as Moody's and S&P, have come under fire recently as potential contributors to the home mortgage meltdown. The charges (or two of them, at least,) are that they gave certain mortgage-related securities higher ratings than they perhaps merited and were not timely in downgrading the securities before the credit markets collapsed. The SEC has questioned whether the process used to rate complex structure finance products was necessarily up to the task. For example, there have been questions raised at Moody's as to whether it assigned its highest credit ratings to certain securities because of self-admitted computer errors, raising questions about the credibility of its assessments. There have also been serious questions raised about conflicts of interest. This morning, the SEC proposed a package of reforms designed to improve the transparency and accountability of credit rating agencies. The proposed new rules are outlined in the SEC's press release.

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