The government does however have hundreds of regulations around bond/debt ratings. This regulatory capture ensures that only a few rating companies can legally provide ratings.
It's interesting to consider whether the ratings do more harm than good at this point. Would a better rating system emerge if we got rid of all the legislation around bond/debt rating?
That's nonsense. You can start a bond rating agency tomorrow. It just won't mean anything because no one will trust it and you won't be in a position to demand access to company internals to inform your ratings. And the SEC won't recognize your ratings (it has recognized additional firms in the past, but it's nontrivial) which means for a lot of regulator purposes your ratings have no effect.
If they got rid of regulations tomorrow, the first barriers to entry would keep you from starting a ratings agency anyway.
It's interesting to consider whether the ratings do more harm than good at this point. Would a better rating system emerge if we got rid of all the legislation around bond/debt rating?