The credit agencies have been beaten up pretty badly for their performance in rating various asset-backed securities. In hindsight, all those AAA ratings didn't mean much, except a whole lot of revenue from investment banks, who needed the ratings to keep their ABS and CDO revenues marching higher. So everyone expected reform, and the agencies tried to get ahead of the regulators with some tepid stabs at self-reform.

But no one expected this: The SEC has proposed that certain bonds no longer need a rating by a credit agency to be sold to investors. Instead of a credit rating from S&P, Moody's or Fitch, the issuer of the bond would have to vouch for the worthiness of the bond, that is, that the investor will actually be paid. This would apply to packaged-together bonds that are issued as one, such as asset-backed bonds and CDOs. The issuer would also be required to keep a percentage of the bond issue to give itself some risk of its own bonds tanking. This would be painful to the credit raters, as asset-backed deals and CDOs seem to be on the rebound a bit. 

For more:
- here's an article from the New York Times 

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