The three top credit rating agencies struck a pact with New York's attorney general on Thursday to change the way they charge fees for reviewing mortgage-backed securities, the latest development in a probe into the U.S. home loan industry.
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(Reuters) -- It is aimed at increasing the independence of ratings agencies, which have been criticized for helping fuel the U.S. subprime mortgage crisis by assigning high marks to risky securities that later tumbled in value. The pact is aimed at altering the way ratings firms are paid. New York Attorney General Andrew Cuomo said that under the old fee system, the agencies had a financial incentive to assign high ratings because they only received fees if a deal was completed. Under the agreements, the firms will receive payments for service even if a deal is not completed. "These are reforms that are going to have a dramatic effect on the market," Cuomo said at a news conference unveiling the agreement. Top executives at the three ratings firms stood by his side when the agreement was announced.
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