L. 109–291 (text) (PDF)) is a United States federal law whose goal is to improve ratings quality for the protection of investors and in the public interest by fostering accountability, transparency, and competition in the credit rating agency industry.
[5] The agencies rated 98% of the trillions of dollars of home-mortgage oriented "structured investment" products.
[4][12] However, in the 12 months that ended in June 2011, the SEC found the big three still issued 97% of all credit ratings, down from 98% in 2007.
[5][13] McClatchy Newspapers found that "little competition has emerged in rating the kinds of complex home-mortgage securities whose implosion led to the 2007 financial crisis".
[5] According to critics, the law has set "odd barriers that are very favorable to the incumbents," made it "exceptionally difficult for a younger player to qualify" as a SEC recognized agency, and "absolutely slammed the door on any new competition" in structured products—"the most lucrative part of the ratings business".