“Moody’s and Standard & Poor’s, stung by criticism that they were too slow to respond to Enron Corp.’s financial troubles, are considering big changes to enable them to cut credit ratings more quickly,” writes Gregory Zuckerman in today’s Wall Street Journal.

“While the shift could give investors a better sense of risk — after all, both credit-rating companies kept Enron at investment grade until just five days before it filed for bankruptcy — it also could add a new dose of volatility to the stock and bond markets.”

“Moody’s Investors Service is considering making more-frequent ratings changes — both up and down — as well as shrinking the review periods for ratings and eliminating ratings “outlooks,” says Christopher Mahoney, chairman of the credit policy committee at Moody’s, a unit of Moody’s Corp. Outlooks are intended to point toward the long-term direction of the rating over several years.”

“Mr. Mahoney stressed that nothing has been finalized and that Moody’s will soon release a paper on the topic, to be circulated to investors for comment.”

“Standard & Poor’s Corp., owned by McGraw-Hill Cos., also may take steps to accelerate the speed at which it makes ratings changes. If investor sentiment sours on a company, and its liquidity becomes an issue, S&P analysts may be more likely to cut a rating, rather than wait to see what happens with the company.”

” ‘Criticism creates urgency but it’s not Enron alone that’s driving the issue of timeliness,’ said Clifford Griep, chief credit officer at S&P. ‘The market is concerned with’ the speed that ratings are changed.”

“A representative of ratings agency Fitch, a competitor of S&P and Moody’s, couldn’t be reached to comment.”