This is a 'shocker'. WSJ reports that the rating agencies stopped slapping AAA on any random bond issuance, because under the FinReg that is about to be signed today, they would be "liable for the quality of their ratings, effective immediately." This has pretty much stopped securitization dead in its tracks for the time being.
And what of the issuers and the underwriters, who still need to - what's that word - oh, right, "disclose" material information about the issuance? Well, nobody trusts them, obviously. And even if they did, people will need time to get used to the idea of actually reading prospectuses and offering memos as well as doing some digging into the credit quality of the issuer. I say, take your time boys, take your time.
But, sarcasm aside, what is really shocking about this story is this. The fact that people are no longer willing to scoop up some securitized awesomeness because the rating agencies no longer want to rate said awesomeness, leads me to conclude that people were still trusting the rating agencies to do their job, and were willing to buy and price bonds based on ratings. WHY???