From Newsday.com:

State Attorney General Andrew Cuomo announced an agreement with Wall Street’s three major credit rating agencies Thursday that would overhaul how they evaluate investments backed by risky mortgage debt.

Cuomo, flanked at a news conference in Manhattan by executives from Moody’s Investors Service, Fitch Ratings and Standard & Poor’s, said the new guidelines will have “a dramatic effect on the industry.”

An investigation was launched in February to determine how mortgage-backed securities, pools of home loans that are packaged together and sold as investments, collapsed during the subprime crisis despite high ratings.

The deal, which applies only to non-prime loans in the United States, is designed to end what the industry calls “ratings shopping” on mortgage-backed securities by altering how the agencies are paid.

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