Inquiry Could Affect Ratings Agency Pay

Mike Konczal, a fellow at the Roosevelt Institute who follows financial reform, is critical of previous methods utilized by the ratings agencies. "It's like if the government said agencies of government had to use Amazon to decide what textbooks to use." He says the legislation before Congress would have the government assign agencies to rate corporate debt and strip the agencies of their protections. "Taking that out of the law will then let private agents kind of determine whether or not there's value in them."

But Robert Litan at the Brookings Institution says the bills won't be able to fix the viewpoint of rating agency employees, who feel they should be working "at the equivalent of Goldman Sachs or Morgan Stanley." Analysts at the agencies still may want to keep banks happy in order to swing a better-paying job, but Litan says after this crisis, working at a ratings agency could mean a resume downgrade. "As Rodney Dangerfield would say, they don't get respect and I'm not sure it's going to be possible for them to earn their respect back."

With that respect gone, Litan says many investment funds have simply stopped paying attention to the rating agencies and are doing the same work in-house.