Reform of the financial services industry has been slow to come and it is especially true for credit ratings agencies, which have so far come out unscathed from the crisis.

But with the lawsuit against Goldman Sachs regarding the marketing of toxic collateralized debt obligations that received the blessings of ratings agencies, the complacency could soon be gone.

A onetime compliance director at Moody's warned the Securities and Exchange Commission about the firm's apparent out-of-date ratings on thousands of municipal bond ratings.

Scott McCleskey, who left the rating agency in September 2008, sent a letter to the SEC in March after officials at Moody's purportedly failed to act on his concerns. McCleskey, who also testified on Wednesday before the House Government Oversight Committee, told the regulator that debt securities from high profile issuers like the City of New York received periodic reviews, but bonds from smaller municipalities rarely did. He told the House Panel that, due to the sheer numbers of issuers, "tens of thousands of municipal securities... aren't getting the same scrutiny as corporate bonds."

Division of Trading and Markets at the Securities and Exchange Commission, you've been a bad, bad boy.

That seems to be the big takeaway from a new report from the SEC's Office of Inspector General regarding the agency's oversight of rating agencies.

The report, issued on Thursday, is an audit of how the SEC has been handling the new process of how credit rating agencies are accredited and policed as required by the Rating Agency Act of 2006.

How are they doing? At least anecdotally, poorly.