Filed under: Other issues, Scandals, McGraw-Hill Companies (MHP), Recession

Standard & Poors, a division of McGraw-Hill (NYSE: MHP), has joined Moody’s (NYSE: MCO) and Fitch in announcing reforms in the wake of the criticism for their role in the subprime fiasco.

S&P says it will hire an ombudsman to investigate conflicts of interest and bring in an outside firm to look at compliance and ethics-related issues. Lead analysts will be rotated from time to time and the company will consider a slew of new factors: liquidity, volatility, correlation and recovery, and “worst-case scenarios.”

But New York Attorney General Andrew Cuomo isn’t buying it: “The supposed reforms announced today by Standard & Poor’s and by Moody’s on Tuesday are too little, too late. Both S.&P. and Moody’s are attempting to make piecemeal change that seem more like public relations window-dressing than systemic reform.”

From an investor’s standpoint, I’m inclined to agree with Mr. Cuomo. Moody’s carries a market cap of nearly $10 billion, but its entire business depends on the willingness of investors to take its ratings and analysis seriously.

But over the past year or so, the “work” of the ratings agencies has been exposed as pretty much a joke. It will take a lot more than this to recover the company’s reputation.

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