Rating agencies seen weathering regulatory storm

By Walden Siew and Rachelle Younglai

NEW YORK/WASHINGTON (Reuters) - The three big credit rating agencies were shaken by a host of new regulations designed to correct shortcomings and curb their influence on investors.

But after the dust settles they most likely will continue to dominate Wall Street.

The biggest threat comes from reforms put forward by the U.S. Securities and Exchange Commission, including one to wean investors and Wall Street off the risk-assessment reports provided by Standard & Poor's (MHP.N), Moody's Investors Service (MCO.N) and Fitch Ratings (LBCP.PA).

The three agencies are blamed for failing to spot the pitfalls in the mortgage securities market, contributing to massive losses for global banks and crippled credit markets.

But with SEC Chairman Christopher Cox and European Union Internal Market Commissioner Charlie McCreevy both expected to leave office early next year, analysts wonder if regulators have the time and authority to implement meaningful reforms.

"I don't think much is going to change. They will keep making money ... because some guy in Oklahoma wants a Moody's or S&P rating," said Philippe Stephan, former director of product development at Moody's KMV, a unit that assesses companies' credit quality.

For decades, S&P, Moody's and Fitch have dominated the landscape. Wall Street turned to them to rate their products and investors relied on them to determine the quality of companies and securities.

Now, the SEC reforms such as eliminating a requirement that money market funds hold highly rated securities means investors may turn to other avenues to evaluate a security's credit worthiness.