The Treasury sent an 18-page draft bill to Congress that would prevent credit ratings agencies from consulting for the companies they are responsible for evaluating.
The Securities and Exchange Commission would have new powers to regulate the industry and companies would have to disclose when they go "ratings shopping" in two other provisions of the plan.
"In recent years, investors were overly reliant on credit rating agencies that often failed to accurately describe the risk of rated products," the Treasury said in a statement.
The reform is meant to help "reduce reliance" on credit rating companies, the government said.
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