Canada’s Dominion Bond Rating Service (DBRS) notes that its credibility horse has run away, and rushes to spin the barn door shut:

DBRS rethinks the way it rates debt:
Embattled credit rating agency DBRS Ltd. has launched a review of
the way it rates asset-backed commercial paper in the wake of last
week’s market freeze, and is acknowledging that it spotted some trouble
in one part of the market late last year.

"We started seeing some transactions where we scratched our heads a
little bit, and then at one point we said, ‘We can’t really support
this,’ " DBRS managing director Huston Loke said of some collateralized
debt obligations that were being funded by commercial paper issuers…

DBRS was the sole rating agency in Canada to give its stamp of
approval to securities in the non-bank ABCP market, and the market’s
future viability is now in doubt. As a result, the rating agency is
coming under fire.

Yesterday, Mr. Loke acknowledged that DBRS spotted trouble with
collateralized debt obligations (CDOs) that some ABCP conduits were
buying late last year. Like ABCP, CDOs are a structured security that
pool together loans – such as thousands of mortgages – and slice and
dice them into a new product that’s sold off to investors…

DBRS was doing surveillance on non-bank ABCP products at least once
a month, and remained comfortable with its ratings, Mr. Loke said.

"On the credit side, yes, we were comfortable with the ratings," he
said. "Although, as these things slide, those are subject to change."

The rating agency did not foresee last week’s turmoil, he said. "If
you looked at the market six weeks ago, literally, it was a very, very
different world," he said. "Were people concerned about subprime? Yes.
But people were still buying asset-backed commercial paper in the U.S.
and Canada."

Yikes.