Finally.. Lets hope this inspires instead of causing more resentment.

Jerry Brown, state attorney general and Newsom gubernatorial rival, is in San Francisco this morning to announce a major financial investigation.

At a 10:30 a.m. press conference, Brown is expected to announce the launch of a probe into the role the credit rating agencies played in fueling the financial crisis. Brown says that at the peak of the housing boom, the agencies gave their highest credit ratings to complicated financial instruments, including securities backed by subprime mortgages, so they would appear as safe as Treasury bonds issued by the government.

In rating the securities, agencies earned billions of dollars in revenue at a rate double what they earned for rating other financial products, all while working behind the scenes with Wall Street firms that created the securities backed by subprime mortgages.

PREEMPTIVE MOVE ON S+P PART??

Standard & Poor's Ratings Services recalibrated its ratings criteria for collateralized debt obligations, resulting in the ratings firm's putting about 4,790 CDO tranches totaling $578 billion on watch for downgrade.

The changes will make the CDO ratings more comparable to ratings in other sectors, S&P said.

The ratings agency will introduce tests - both quantitative and qualitative - to supplement its default-simulation model. S&P will also adjust its models to target AAA default rates it believes are commensurate with conditions of extreme macroeconomic stress, such as the Great Depression, as well as BBB default rates consistent with the highest actual corporate defaults over the past 28 years.

S&P said downgrades are likely to be multiple notches after reviewing the tranches over the coming months, with Chief Credit Officer Thomas Gillis estimating that outstanding synthetic CDOs will likely experience an average downgrade of four notches. Super senior AAA tranches will probably be affected less, with expected downgrades of two to three notches, while tranches rated AAA will likely be affected more, with an estimated downgrade of four to five notches.

Of the tranches on watch for downgrade, 1,626 tranches are from 623 European transactions and are $250.5 billion in size.

"We believe that adding quantitative and qualitative elements to our analysis - entirely apart from the Monte Carlo default simulations we run - will provide a more robust analysis than using only simulation models," Gillis said.

Ratings agencies have been criticized about being overly optimistic with their ratings earlier this decade when structured-finance securities were created by packaging loans into newly created investments. CDOs, which use sliced-and-diced assets such as subprime-mortgage bonds to create customized products offering various levels of risk, have been at the heart of steep write-downs at big banks and brokerage firms.