The credit rating agencies have done it again. As they did in Australia, abandoning the retail market after ASIC introduced its licensing requirements, the ratings agencies have abandoned the public market in the US, after the Wall St Reform Bill was signed into law by President Obama on Wednesday night our time.As reported here yesterday, Fitch Ratings, Moody's Investors Service and Standard & Poor's have advised clients that their credit ratings cannot be included in any Securities Act registration statement or related prospectus, effective immediately. The CRAs have taken this stance because under the provisions of the new legislation they have lost their exemption from "expert liability" under Rule 436(g) - in other words, they can be sued like any other professional advisor that signs off on a prospectus.This is a very big market that the CRAs have now effectively excluded themselves from. The move in the US will have a much bigger impact on their business than refusing to provide credit ratings for products aimed at retail investors in Australia. By convention corporate bond issuers in the US public market are rated investment grade companies but there is no legal requirement for them to be rated. On the other hand, issues of asset backed securities in the public market are required to be rated.Many asset backed securities are placed in this market and a number of pending issues have been put on hold until this situation is resolved. However, resolution may well not go in the ratings agencies favour.Just as the new legislation requires references to nationally recognised statistical rating organizations (that is, ratings agencies) to be removed from federal regulations, the Securities and Exchange Commission could simply revoke its requirement for asset backed security issues to be rated. This would move the US public market to being an unrated market, just as the retail markets of Australia and New Zealand are unrated markets. The use of credit ratings in these markets is driven solely by investor demand and the ratings agencies' willingness, or not, to participate.One possible negative consequence of the SEC revoking its requirement for asset backed security issues to be rated, is the suggestion that the SEC will require the CEO of the originating organisation to sign-off on the credit quality of the issue. This should kill any potential asset backed security issue stone dead, if the CEO of the originator is required to take personal liability.In the meantime, the 144A market, in which the Australian banks have raised US$94 billion over the last 18 months, will continue unaffected. The 144A market operates in the same manner as the domestic wholesale corporate bond market. There is no requirement for issues to be registered with the SEC and there is no requirement for a prospectus, just an offering memorandum. Similarly, there is no requirement for a credit rating; it is just a market convention.Finally, the CRAs also lost their exemption from Reg FD - the fair disclosure rule. The CRAs can no longer be provided with inside