"Even as Moody's Investors Service was handing out triple-A ratings last year on a huge number of securities tied to mortgages, a senior Moody's analyst involved in rating them was warning about the housing market and asking if the ratings were too optimistic. In late 2006 and early 2007, the Moody's Corp. unit continued to rate new [CDOs] even as the analyst, Eric Kolchinsky, aired his concerns to his colleagues and his boss, people familar with the matter said. ... As the credit crunch drags on, regulators and lawmakers are pressing for answers on why ratings firms gave investment grade ratings to subprime bonds and [CDOs] and didn't respond more aggressively to signs of trouble. ... Kolchinsky, a managing director, was one of many people involved in the discussions. He specifically took his concerns to his boss at the time, Yuri Yoshizawa, a group managing director at Moody's, who said she would take Mr. Kolchinsky's point of view under consideration, according to people familar with the matter. Mr. Kolchinsky wasn't available to comment, according to a spokesman. ... 'We all wanted to downgrade as soon as possible, but we wanted to downgrade based on information we could rely upon,' says Ms. Yoshizawa. For example, she says, the firm studied the performance of each subprme securitization it had rated instead of making what she calls a 'blanket cut.' ... Moody's also might have been seen as doubting its own ratings on subprime mortgages if the CDO group expressed doubts on mortgage-backed CDOs. A Moody's spoksman says that 'vigorous discussion among analysts is encouraged and expected in ratings committees,' so debates about CDOs 'would not be unsual.' He added that 'commerical considerations do not influence our ratings,'" WSJ, 7 June 2008.
It's good S&P works in the public interest. It cut MBIA and Ambac's ratings after the muni bond market concluded their guarantees are worthless. I await public apologies to William Ackman, long-time MBIA nemesis. Right. See my 19 and 20 December 2007 and 17 January 2008 posts. I never "understood" the monolines business, see my 30 October, 8, 18, and 30 November and 8, 13 and 15 December 2007 posts. Apparently the S&P and Moody's geniuses never understood it either. Hey guys, for a mere $10 million I'll "splain" it to you. Waddayasay? I got it: the S&P and Moody's geniuses read Marilyn Cohen's Forbes article, my 16 May 2008 post. Who needs these guys? Shut 'em down.