An AAA rating "allows investors to buy it and feel a sense of warm and fuzzy about how safe the investment is, with respect to likelihood of default," said Shulman.
Since the credit crisis, the same agencies have maintained their dominance.
"There's a heavy reliance on the ratings agencies because there are not a lot of people who do that work outside ratings agencies,'' said Margaret Cannella, an adjunct professor at the Columbia Business School, "the credit market has not historically had the resources to do the work."
In the stock market, there may be 50 analysts covering one company like IBM. By contrast, only the three agencies may be rating a bond issuer.
Amidst public outcry, credit rating agencies have come under greater scrutiny. And several investor lawsuits are working their way through the courts, Shulman said.
"The ratings agencies have become more vigilant," Cannella said. But, she cautioned, "increased vigilance can be a good thing, but if you abuse it, in a lot of ways it's not."
She called Standard & Poor's warnings about a downgrade "grandstanding."
"This is the time to shine by being demonstrably tough, by being overly tough. On the other hand, they do have standards to uphold."
If the US does lose that AAA rating, it is estimated that the country will pay as much as $100 billion more a year in interest payments. And that will translate to higher rates for mortgages and car loans.
On the positive side -- interest rates on savings and money market accounts will also go up.
ABC News' Susanna Kim and Alan Farnham contributed to this report.