Big and small investors often rely on ratings agencies to help them assess a company's risk of default when buying stocks and bonds.

The Senate version of the financial reform bill had contained a mechanism that would have taken away ratings agencies' incentive to pander to large clients by taking away the hiring decision from the firm seeking a rating, says Baker. Ratings agencies would have been assigned to each company looking for ratings by a private, independent clearinghouse. However, during the conference committee, the provision was delayed for two years to give the SEC more time to study the issue and to propose alternatives.