Rating Firms Agree to Settlement over Business Practices

A coalition of leading Wall Street credit rating firms is close to an agreement with New York Attorney General Andrew Cuomo to end an investigation into their roles in the subprime-mortgage crisis.

Cuomo has spent months poring over thousands of pages to determine whether investment banks withheld critical information about the home loans they were packaging into bonds to be sold to investors.

The settlement which would allow rating firms (they include Fitch Ratings, Moody's Investors Service and Standard & Poor's) would allow the rating firms to avoid government sanctions for their roles in the credit crunch, an unnamed source revealed to Bloomberg.

The deal would require rating firms to implement within six months new policies such as a modified fee structure and increased disclosure about the deals they rate. Under the terms of the settlement, the credit companies would also avoid admitting to any wrong doing.

Executives at Fitch, Moody's and Standard and Poor's say they are cooperating with the Securities and Exchange Commission (SEC) and other regulators to improve the quality of their analysis and services.