Among the casualties of the financial crisis were the reputations of the major credit rating agencies, which gave high ratings to risky mortgage-backed securities.
Federal regulators have approved the first step toward reducing the role of these private agencies in assessing whether banks have enough capital.
The big rating agencies — Moody's Investor Service, Standard & Poor's and Fitch Ratings — were supposed to serve as the nation's financial gatekeepers. But they assigned the best grade — AAA — to some of those risky subprime mortgage-backed securities, which went bad and helped cause the housing bust.
The landmark financial overhaul law, enacted last month, calls for reducing the influence of the rating agencies. And the first step was approved Tuesday by the board of the Federal Deposit Insurance Corp.
The FDIC voted to take public comment on a better way to assess the risks that banks are taking. Some say that's easier said than done.
"If it was easy to find alternatives, people would have done it a long time ago," says Claire Hill, a professor at the University of Minnesota Law School.
"This is not the first time they goofed," Hill says. "Remember Enron? There's a long history of goofs, and every time there's some story about why they won't goof again."
Before the vote, FDIC Chairman Sheila Bair said, "The task of replacing the agencies with a better substitute will not be simple."
It won't be quick, either. After the public comments, the FDIC will propose new rules in a process that's expected to take months.