The world's three biggest credit-rating agencies were close to securing a deal with US regulators yesterday to reform the way in which they assess risk in the wake of America's credit crisis.

Andrew Cuomo, the New York attorney-general, is in the final stages of agreeing a new regime for the rating agencies to try to make them more transparent and less vulnerable to conflicts of interest.

The rating agencies have been criticised for their role in the credit crisis that erupted on Wall Street last summer. The groups, which include Standard & Poor's, Moody's and Fitch, were said to have failed to recognise the increased risk of default of a number of mortgage-backed bonds and of being too slow to alert the market.

The rating agencies are already being investigated by the US Securities and Exchange Commission and by senators in Washington for their role in the credit turmoil on Wall Street.

It is believed that Mr Cuomo has reached an agreement with the agencies over the fees they charge the companies who issue bonds.

In the past, bond issuers have shopped around between rating agencies to get the best rating for their securities. This meant that the agencies had an incentive to go easy on their rating in order to win the business. Mr Cuomo is proposing that the agencies be paid for their review, even if they were not hired to rate the deal. This would mean that the firms would be paid even if they handed out a tough rating.

As part of the agreement, the rating agencies are thought to have negotiated immunity from prosecution over their alleged role in the credit crisis in return for assisting the SEC with its inquiry - a move that will anger many on Wall Street, who believe that the agencies failed them.

Mr Cuomo is also believed to have secured an agreement from the agencies to change the way in which they assess the risk of default for mortgage-backed bonds.

A number of banks bought bonds that were backed by US mortgage debt. The value of those bonds depended on whether mortgage borrowers whose home loan served as collateral to the bond kept up their monthly repayments. As the US housing recession deepened, a number of Americans fell into arrears with their mortgages and the bonds became effectively worthless. The rating agencies were widely accused of failing to downgrade the bonds fast enough as the mortgage crisis deteriorated.

Many banks have been forced to write off the value of billions of dollars of mortgage-backed bonds from their balance sheets. The rating agencies were accused of being partial because they charged fees to rate the securities from their issuers.

A settlement between Mr Cuomo and the agencies could result in big changes for the $5 billion-a-year credit rating industry, similar to changes to analyst research engineered by Eliot Spitzer, Mr Cuomo's predecessor. In 2002 and 2003, Mr Spitzer pushed the financial services industry to separate analyst research from investment banking activity. This has resulted in stock research analysts becoming much more likely to assign “hold” and “sell” ratings.

— Moody's said yesterday that it was likely to cut its rating for the bond insurance arms of MBIA and Ambac amid concerns about mortgage-related losses and limited new business prospects. Shares of both companies fell by more than a sixth.

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