Attorney General Martha Coakley is urging the Securities and Exchange Commission (SEC) to enforce legal requirements against credit rating agencies, established under the Dodd-Frank financial reform law, to better protect investors and avert another lending crisis.

In a letter, Coakley asked federal regulators and Congress to take action to protect consumers, investors and the marketplace, according to a statement.

"Investment banks drove the increase in subprime lending and lax mortgage standards that contributed so dramatically to our economic collapse – this occurred on the watch of credit rating agencies," Coakley wrote. "The Dodd-Frank financial reform law rightly addressed that issue by holding credit rating agencies to the same standards as accountants and lawyers. That is why the SEC’s decision not to enforce these important regulations is so disappointing. We are calling on the SEC to enforce these regulations as a way to protect investors and help prevent a future lending crisis."

Other concerns outlined in the letter include:

• The SEC has defeated the intent of Congress to better protect investors against rating agency misconduct.
• The SEC has created market confusion by allowing the widespread view that the requirements of Regulation AB have changed, when in fact the SEC has simply announced that it does not intend to initiate cases on this issue at this time.
• The SEC may be creating the potential for significant unintended consequences, including future liability of issuers and underwriters for failure to comply with applicable regulations.