WASHINGTON—Standard & Poor's downgrade of U.S. debt last week is likely to hasten the replacement of credit ratings within bank regulatory requirements.

The Dodd-Frank Act enacted last year required the banking agencies to remove all references to credit ratings within existing rules, but the regulators have dragged their feet on carrying out that mandate.

Instead, regulators have testified to Congress that replacing the credit ratings is easier said than done, and subtly suggested lawmakers revisit the issue.

With the S&P downgrade enraging Senate Democrats and the Treasury Department, it is highly unlikely that Congress will seek to overturn the requirement, however, and some lawmakers are expected to put more pressure on the agencies to move quickly.

"It will reinforce the view of those in Congress who believe that Dodd-Frank made the right decision," said Wayne Abernathy, executive vice president of financial institutions policy at the American Bankers Association and a former Treasury official in the Bush administration. "What they will say is, 'We put this provision in Dodd-Frank because these are largely as educated opinions as you want to grant them, but they're educated opinions, and they shouldn't be carrying with them the force of law.'"

Already, a backlash against the rating agencies appears to be developing in Congress.

The Senate Banking Committee has said it will look into last week's downgrade, and Chairman Tim Johnson said he disagreed with the rating agency's move.

"I am deeply disappointed in S&P's decision to enter into the game of political punditry," he said in a press release.

Karen Shaw Petrou, a managing partner at Federal Financial Analytics Inc., said the S&P decision was wholly subjective, based on their political judgment rather than a long-term view of U.S. credit worthiness. But it also spotlighted the fact that regulators have not yet removed credit ratings from the bank regulatory process.

"Regulators knew that created risk in the market," Petrou said. "Dodd-Frank in fact told the regulators to fix that and a year later we haven't because it isn't an easy fix to make. So we put it aside and now we're exactly back in the same soup."

The Dodd-Frank provision that sought to reduce the reliance on credit ratings is one of the few parts of the law that has strong bipartisan support on Capitol Hill.

"Congress is not now going to go back and say, "Oops, we were wrong. We love ratings,'" Petrou said. "It's not going to happen. What you will see is the banking agencies finally putting their shoulder to it and implementing Dodd-Frank to end reliance on ratings."

For the past year, the Federal Reserve Board, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. have taken a few initial steps in developing a new set of alternative standards to replace the existing credit ratings agencies, but have lagged in implementing the statute.

To date, the regulators have put together an early draft proposal for comment and held a roundtable discussion with experts to come up with ideas for a possible replacement.

In their plan, the regulators offered a wide range of approaches with "varying complexity and risk-sensitivity" as alternatives, according to the Fed's July report to Congress.

That report said that "the need for alternative standards should be risk sensitive, should be easy to implement, be defined to allow banking organizations of varying size and complexity to arrive at the same assessment of creditworthiness for similar exposures, and take account of the costs and burdens imposed on small firms."

But the regulators have had difficulty settling on an alternative to credit ratings.

At a Congressional hearing with the regulators last month, the FDIC warned that if the standards are too detailed, they could create a compliance burden for banks, but if they are not detailed enough, they may not accurately distinguish the credit risk of a particular investment.

"Balancing the goals of risk sensitivity on the one hand, and not placing undue burdens on banks on the other, will be important," the FDIC said in a written statement.

The alternatives that the bank regulators are considering as potential replacements for credit ratings include bond spreads and other market-based indicators, a reliance on balance-sheet financial ratios, and self-assessments of credit risk by the banks themselves.

The regulators also noted that taking steps to reduce the reliance on credit ratings will complicate the task of harmonizing bank capital requirements internationally.