Credit Rating Agencies Under Congressional Scrutiny

Implications: Congress is looking for the "villians" in the subprime mortgage meltdown, and the credit rating agencies are prime suspects.  S&P, Moody's and Fitch will have to play a defensive game, but in the end substantive legislation is unlikely.

Analysis: Congressional hearings are likely to target S&P, Moody's, Fitch and the credit ratings industry for the problems in the subprime mortgage market.  Legislation might be introduced that could affect their profitability by increasing regulatory oversight, or creating new potential civil liabilities.  However, it is more likely that Congress will back away from substantive legislation and ask the SEC to increase scrutiny instead.