Time for another big short? The Securities and Exchange Commission (SEC) has issued a new report [PDF] warning that the credit rating agencies have not been sufficiently chastened by their epic failure to properly rate securities in the run up to the 2008 financial crisis.

As the book and film “The Big Short” describes in detail, prior to the 2008 crash the credit rating agencies were giving junk mortgage-backed securities (MBS) their highest ratings. This incorrect information helped distort the market and exacerbated the crisis. The rating agencies gave the bad ratings their approval, in part, because of a conflict of interest where rating agencies are paid by those they rated. If a client did not get the rating they wanted, they would take their business elsewhere.

Now the SEC is saying the rating agencies are back to their old tricks, compromising their claimed objectivity to bring in business.

The report cites unnamed rating agencies — referred to as nationally recognized statistical rating organizations (NRSROs) — for “engaging in sales and marketing practices” when discussing their ratings with potential clients as well as lacking controls for conflicts of interests and “unfair, coercive, or abusive practices.” The report only distinguishes between rating agencies/NRSROs by size — large or small.

In once case the SEC notes, ratings were actually changed after senior executives at the raging agency intervened. According to the report “two ratings determinations made by rating committees were subsequently changed at the prompting of senior ratings personnel, which contravened this NRSRO’s policies and procedures governing the rating process and rating appeals and resulted in the misapplication of its criteria.”

In other words, the ratings agency had a criteria to evaluate a security, but after a less favorable rating was made senior executives overruled the company’s own analysts and system to give the client a more favorable rating. A perfect example of the pay-to-play system that led to the 2008 crash as rating agencies rated garbage as gold to keep Wall Street business.

Apparently, we are going to run this experiment again and hope for different results.