People in Congress are working on far-reaching legislation to regulate the financial-services industry in hopes of preventing a repeat of the financial turmoil we saw over the last two years.

The U.S. House has already passed a comprehensive package of reforms, but the Senate Banking Committee continues its deliberations on issues ranging from the regulation of institutions “too big to fail” to establishing a consumer-protection agency for financial-services products.

Two key members of the Banking Committee, Rhode Island’s Sen. Jack Reed, a Democrat, and New Hampshire’s Judd Gregg, a Republican, have focused on, among other things, the committee’s work related to Credit Rating Agencies (CRAs), the private-sector agencies that rate bonds.

While Senator Reed’s work may not be the stuff of kitchen table debates, addressing CRA issues can be important to the recovery and renewed economic expansion and job creation.

CRAs have been criticized for not fully anticipating the severity of the financial crisis of 2008, and most informed observers agree that we need to revamp the regulations that govern these agencies.

Readers are probably thinking, why should I care about CRAs? As a Rhode Island businessman, I understand how CRAs play a role in economic development and job creation. What happens to the rating agencies can affect many aspects of our lives, from our daily commutes, to tax rates and the schools our children attend.

When state and local governments raise money for important infrastructure projects, instead of taking a loan from a bank or raising taxes, they often borrow money directly from capital markets by issuing bonds or notes. These bonds are typically bought by private investors, who provide cash to fund building schools, roads and water-treatment systems.

As part of their analysis of the credit risk of countless government bonds issued each year, many investors look to widely recognized credit-rating symbols, from AAA to D, issued by CRAs. Without a credit rating from a CRA, it could be more difficult for Rhode Island and its municipalities to secure funds for infrastructure-modernization projects.

For example, work began last month on a number of major projects to increase the quantity and improve the quality of drinking water. Among other things, these projects would expand output from the Scituate Reservoir, which supplies half the water in Rhode Island. In Kent and Washington counties, both of which have faced water shortages in the past, the Water Resource Board is testing high-capacity wells, protecting existing wells from pollution and developing potential new well sites.

The total cost for this major overhaul of our water system is about $76 million, a large part of which was raised through state and municipal bonds rated by CRAs.

CRAs let a municipality obtain a standardized, nationally recognized rating for its bonds, expanding its access to capital. For municipalities to enjoy consistent access to the capital markets, Congress needs to avoid hamstringing the raters, while reforming a status quo that even the rating agencies see as unsustainable.

A final bill from Congress must strike the right balance with respect to credit-rating agencies. It should encourage CRA competition and transparency, maintain the analytical independence of CRAs and demand greater accountability without opening the door to a cascade of frivolous lawsuits.

Phil Papoojian is vice chairman of the Smaller Business Association of New England (SBANE) and managing director of Mereco Technologies Group Inc., in West Warwick.