According to The New York Times, three of the nation's largest credit rating firms are close to an agreement with the New York attorney general to change some of their core business practices which had brought them under his office's scrutiny.

The firms, Standard & Poor's, Moody's Investors Service, and Fitch Ratings, played a critical role in the mortgage securities mess when they awarded certain security packages triple-A ratings which allowed investors like pension funds and insurance companies to buy them.

Under current procedures banks can shop for the best ratings because they only pay when they accept the rating. If they don't like the rating offered by S&P for example, they can go to Fitch and hope to obtain a higher rating without notifying investors of the earlier bad marks.

For years there have been charges of conflict of interest because the investment banks ' i.e. the sellers of the loan packages ' were paying for the product ratings. In earlier days the investors who were purchasing the loans hired and paid the rating services.

The proposed agreement with Attorney General Andrew M. Cuomo would require a rating agency to stage its fees for various steps leading up to the rating as well as the rating itself. Every three months they will be required to report on all the deals they were asked to rate and all that they actually did rate.

The ratings firms will also assist Cuomo in his larger investigation into how mortgages were packaged into securities.

Cuomo's larger investigation is focused on whether the big investment banks withheld information about the mortgages and home equity lines they were packaging into bonds to be sold to investors such as hedge funds, insurance companies, and pension funds.