Sen. Franken wants new government panel to grade Wall Street

Credit agencies that rate Wall Street's big banks were blamed for playing a pivotal role in the financial meltdown, but those agencies are still being paid for their work by the very banks they rate. That was one of the root causes of the financial crisis of 2008, according to a bipartisan Senate subcommittee that investigated the crash.

Senator Al Franken, D-Minnesota, wants to stop what he calls this "pay to play" rating system. He is meeting with the Security and Exchange Commission Tuesday to discuss credit rating reform, and the problems with "rate shopping."

"Let's say an investment bank created a financial product, say, subprime mortgage-backed securities and they wanted to get a rating on that. So, it would go shop its two different credit rating agencies and make sure that they got a AAA, whoever they picked would give them a AAA," said Franken. "It was sometimes unspoken, but the credit rating agencies knew that they wouldn't get the next gig if they didn't give a AAA."

"That's how the house of cards fell and Americans lost trillions of dollars," said Franken of the ratings agencies. "This is a classic conflict of interest."

"It would be as if a figure skater paid the judges to give her all 10s every time she skated," said Franken.

Franken's bill would require an independent board to assign the initial rating of any structured financial product issued by a bank, and assign it to a credit rating agency based on the agency's expertise and track record.

"Essentially, it would be replacing pay-to-play, which is what we have now and what we had and what led to the financial meltdown, and replace it with pay for performance," said Franken.

CNN asked Standard & Poor's what they thought of Franken's plan. The ratings agency issued a press release that said, "S&P supports discussions to identify the most beneficial ways to increase transparency around structured finance securities, including the availability to investors of more high quality, diverse views of creditworthiness."