SEC Chairwoman Mary Schapiro spoke as the agency considers possible action affecting the $5 billion-a-year industry, dominated by Standard & Poor's, Moody's Investors Service and Fitch Ratings.
The companies have been widely criticized for failing to give investors adequate warning of the risks in subprime mortgage securities. The collapse of these securities helped set off the global financial crisis.
"As much as (the SEC has) done, there is still more to do," Schapiro said. "The status quo just isn't good enough."
The SEC is examining the industry's business practices, competitive issues, potential conflicts of interest and government oversight at a public "roundtable" meeting.
Rating agency officials, companies that issue bonds, and groups representing mutual and hedge funds, as well as investor advocates and academic experts are slated to speak.
The agencies are crucial financial gatekeepers, issuing ratings on the creditworthiness of public companies and securities. Their grades can be key factors in determining a company's ability to raise or borrow money, and at what cost which securities will be purchased by banks, mutual funds, state pension funds or local governments.
The agencies had to downgrade thousands of securities backed by mortgages as home-loan delinquencies soared and the value of those investments plummeted. The downgrades contributed to hundreds of billions in losses and writedowns at major banks and investment firms.
S&P, Moody's and Fitch say they have taken steps to increase transparency and will make further enhancements in the future.
Schapiro said the SEC must ask some basic questions, such as whether the market's reliance on ratings by the big agencies should be reduced.
The SEC has undertaken several actions to enhance oversight of the industry under authority it gained in 2006 legislation, Schapiro said, but more must be done.
"The role of credit-rating agencies must be an area for our intense review as we think about how to promote investor protection and market integrity, and restore confidence in our financial system," she said.
In December, the SEC adopted new rules designed to stem conflicts of interest and provide more transparency for the ratings industry.
But the SEC commissioners did not adopt a controversial proposal to require ratings of complex securities, such as those underpinned by mortgages, student or auto loans, to be distinguished by a special identifier from those for more traditional securities like corporate or municipal bonds.
That proposal drew opposition from Wall Street when it was floated previously.