"A senior Moody's Corp. executive said at a congressional hearing that an outside legal firm investigating claims by a former analyst has so far found no evidence of wrongdoing. ... Richard ... Cantor told the House Committee for Oversight and Government Reform that Moody's hired law form Kramer Levin Naftalis & Frankel LLP to investigate a July complaint submitted by Eric Kolchinsky, a managing director who left Moody's in mid-September", Serena Ng and Sarah Lynch at the WSJ, 1 October 2009, link: http://online.wsj.com/article/SB125432192757352625.html.
"This morning we had hoped to be able to praise House Financial Services Chairman Barney Frank, who seemed ready to break up the credit ratings racket that did so much to inflame the financial panic. But just when you think Barney will free up competition, he reinforces the cartel. ... A former Moody's employee, Eric Kolchinsky, described a 'reckless disregard for the truth' in an August memo to a Moody's official. Yesterday he tesified that those responsible for ensuring sound ratings methodology are 'routinely bullied' by management. ... Yet despite the path of financial destruction paved by the Big Three raters, Washington still won't yank their privileged status as Nationally Recognized Statistical Ratings Organizations (NRSROs). Based on the draft reform written by Mr. Frank's colleague, Paul Kanjorski (D., Pa.), the raters can expect more compliance and legal costs, but no threat to their official role as America's judges of credit risk. ... Appearing in CNBC in September, Mr. Frank said, 'We have exalted rating agencies too much.' He added, 'We need to repeal laws that mandate the use of rating agencies.' ... The bureaucrats at the [Fed], SEC and elsewhere merely need to study the issue and report back to Congress. These are the same people who wrote the flawed rules, so why would they eliminate them? ... But by bleeding the NRSROs while leaving intact rules that require their services, Mr. Kanjorski could be creating a senario in which regulators are soon calling S&P and Moody's too big to fail. This is essentially what Sarbanes-Oxley did for the accounting firms after Enron: In the name of punishing them, make then even more important", my emphasis, Editorial at the WSJ, 1 October 2009, link: http://online.wsj.com/article/SB10001424052748704471504574441273559132330.html.