Government regulation failed, so anyone with half a mind knows that more government regulation is not the answer. That's like treating alcoholism with Wild Turkey.
A market unregulated by government will create a need for investors to protect their investments. Right now, even, there's a need for investors to protect their investments from government regulators. Credit rating agencies, uninfluenced by government regulators which restrict competition, would compete and the winners would rise to regulate against fraud and manipulation. The best CRAs would be the ones who investigate thoroughly and provide the most reliable information.
What would happen if the rating agencies and companies become too "friendly"? They would be exposed, brought to court and retribution would break them from sucking eggs. What happens when government regulators become too "friendly" or incompetent or politically influenced? The government hires more government regulators and no one is punished except the investors.