Reply #90: MOODY'S ANALYST BREAKS SILENCE: Says Ratings Agency Rotten To Core With Conflicts

[Pale Blue Dot]

We've included highlights of Harrington's story below. Here are some key points:

Moody's ratings often do not reflect its analysts' private conclusions. Instead, rating committees privately conclude that certain securities deserve certain ratings--but then vote with management to give the securities the higher ratings that issuer clients want.

Moody's management and "compliance" officers do everything possible to make issuer clients happy--and they view analysts who do not do the same as "troublesome." Management employs a variety of tactics to transform these troublesome analysts into "pliant corporate citizens" who have Moody's best interests at heart.

Moody's product managers participate in--and vote on--ratings decisions. These product managers are the same people who are directly responsible for keeping clients happy and growing Moody's business.

At least one senior executive lied under oath at the hearings into rating agency conduct. Another executive, who Harrington says exemplified management's emphasis on giving issuers what they wanted, skipped the hearings altogether.


Read more: http://www.businessinsider.com/moodys-analyst-conflicts-corruption-and-greed-2011-8#ixzz1VfT8Cpen


And here is a link to Harrington's full comment to the SEC:

http://www.sec.gov/comments/s7-18-11/s71811-33.pdf