Three Major Credit Rating Firms Agree to New Business Method

New York–Credit rating firms Moody’s, S&P, and Fitch and New York state Attorney General Andrew Cuomo settled on new practices on Thursday, reports.The deal–the result of a probe Cuomo has been handling for over a year–will reconfigure the ratings firms’ incentives for offering services.Previously, although multiple credit raters would weigh in on a residential mortgage-backed security, just one would be paid for doing it–frequently the one that provided the best rating. Agencies who used laxer ratings standards often got more business as a result, which caused questions about impartiality in the $5 billion-a-year credit rating industry.Under the new agreement, servicers would have to pay for each review, whether or not it is used.