How to Prevent More Bond Rating Fiascoes When companies or countries issue debt, ratings agencies assign grades based on how creditworthy the issuers are believed to be. Low grades can cost the issuers dearly. But during the housing crisis, the major ratings firms gave the highest grades to mortgage-based securities that proved worthless. This month, the government sued one of the three dominant agencies, Standard & Poor's, saying its evaluations of some of those securities were fraudulent. What should be done to reform the ratings industry?