The Wall Street Journal reports this morning that part of the bond market has shut down because credit raters like Moody’s have told issuers they can’t quote their ratings.

Why? Because the financial-reform bill (law in a couple of hours) makes Moody’s, S&P, and Fitch—who were critical enablers of the financial crisis—for the first time liable for what they say. They’ve hidden behind the First Amendment for years.

Once the bill is signed into law, advice by the services will be considered “expert” if used in formal documents filed with the Securities and Exchange Commission. That definition would make them legally liable for their work, meaning that it will be easier to sue an firm if a bond doesn’t perform up to the stated rating.

That is a change from the current law, which considers ratings merely an opinion, protected like any other media such as a newspaper.

And:

The companies say that, until they get a better understanding of their legal exposure, they are refusing to let bond issuers use their ratings.

That is important because some bonds, notably those that are made up of consumer loans, are required by law to include ratings in their official documentation. That means new bond sales in the $1.4 trillion market for mortgages, autos, student loans and credit cards could effectively shut down.

There have been no new asset-backed bonds put on sale this week, in stark contrast to last week, when $3 billion of issues were sold. Market participants say the new law is partly behind the slowdown.

This, needless to say, deserves watching.

This provision seems to have flown in under the radar of the press. The Journal had a nice story about it on June 18, but cut it in half and stuffed it inside the Money & Investing section. I don’t see anything from The New York Times.

But the Journal says ratings agencies were caught by surprise, too:

The change caught the ratings agencies by surprise. The original Senate version of the bill didn’t include the provision. It was only on June 30, when the Dodd-Frank bill was passed, that the exemption was removed.

What else don’t we know about this soon-to-be law? We sure need to know more about this provision.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.