It’s likely not quite the mea culpa some in the industry might have hoped for, but numerous published reports on Wednesday suggest that both Standard & Poor’s Ratings Services and Moody’s Investors Service have reached a deal with New York attorney general Andrew Cuomo on their core ratings businesses. According to the New York Times, which first broke news of the expected deal early Wednesday morning, Cuomo would co-opt the rating agencies into his office’s ongoing investigation into the role investment banks played within the formerly booming private-party mortgage securitization space; in particular, numerous reports have suggested that Cuomo is looking to see if i-banks withheld information from investors and due diligence providers alike, massaging the ratings of key MBS and CDO deals in order to obtain the best possible rating. Earlier this year, Cuomo secured the cooperation of due diligence and loan surveillance specialist Clayton Holdings Inc. (CLAY) as part of the same investigation. In exchange for their help, Bloomberg News reported that the agencies would receive the equivalent of immunity — freedom from any sanctions that might otherwise be levied for prior ratings missteps, with Cuomo’s office terminating its own inquiry into the rating agencies as a result. Such an outcome, if confirmed, would seem sure to lead at least some investors to cry foul. While a formal announcement has yet to be made, a number of media outlets obtained what appeared to be confirmation of the pending agreement from S&P president Deven Sharma, who said the agency was “pleased” to work with Cuomo’s office on a new set of standards. Neither Moody’s or Fitch have commented to the press on the alleged deal. New ratings rules Under the new rules being reported on Wednesday, rating agencies would be able to earn their fees regardless of whether or not they rated the final issuance — preliminary review work on a deal would be sufficient for earning fees on mortgage-backed securities and other forms of structured debt. Currently, only the firms selected to formally rate a new issue typically earn a fee for so doing. Word that the agencies might be able to add to their fee base, while simultaneously avoiding sanctions for missteps that many believe helped create the current secondary mortgage market carnage, clearly irked some investors that spoke with Housing Wire. “These guys commit highway robbery, and get off scot-free because they’re going to name the make and model of the car they drove to do it?” said one MBS investor, who asked that his name not be used. “Unbelievable.” The deal between the New York AG and the rating agencies is expected to be announced ahead of a scheduled June 11 release of new ratings conduct guidelines by the Securities and Exchange Commission. The SEC is expected to follow recent suggestions published by the International Organization of Securities Commissions, an international conglomerate representing more than 100 securities regulators. It’s unclear if any deal between Cuomo and the rating agencies would conflict with expected SEC regulations. Disclosure: The author held no positions in CLAY when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.