{"id":185262,"date":"2011-08-20T20:26:00","date_gmt":"2011-08-21T01:26:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2011\/08\/20\/unsurprising-news-about-the-ratings-agencies\/"},"modified":"2011-08-20T20:26:00","modified_gmt":"2011-08-21T01:26:00","slug":"unsurprising-news-about-the-ratings-agencies","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2011\/08\/20\/unsurprising-news-about-the-ratings-agencies\/","title":{"rendered":"Unsurprising News About the Ratings Agencies"},"content":{"rendered":"<div style=\"border: 1px solid black; float: right; margin: 0px 10px; padding: 5px; text-align: center; width: 400px;\"><a href=\"http:\/\/img73.imageshack.us\/img73\/2451\/ricklouiegambling248356no6.jpg\"><img decoding=\"async\" border=\"0\" bordercolor=\"white\" src=\"http:\/\/img73.imageshack.us\/img73\/2451\/ricklouiegambling248356no6.jpg\" width=\"390\" \/><\/a> <span style=\"font-style: italic;\">I&#8217;m shocked, shocked to find that gambling is going on here!<\/span><\/div>\n<p>A former senior VP at Moody&#8217;s has written a detailed layer to the SEC <a href=\"http:\/\/www.businessinsider.com\/moodys-analyst-conflicts-corruption-and-greed-2011-8\">alleging that the ratings agency systematically pressured analysts to uprate crappy derivatives<\/a>:<\/p>\n<blockquote style=\"color: blue;\"><p>A former senior analyst at Moody&#8217;s has gone public with his story of how one of the country&#8217;s most important rating agencies is corrupted to the core.<\/p>\n<p>The analyst, William J. Harrington, worked for Moody&#8217;s for 11 years, from 1999 until his resignation last year.<\/p>\n<p>From 2006 to 2010, Harrington was a Senior Vice President in the derivative products group, which was responsible for producing many of the disastrous ratings Moody&#8217;s issued during the housing bubble.<\/p>\n<p>Harrington has made his story public in the form of a 78-page &#8220;comment&#8221; to the SEC&#8217;s proposed rules about rating agency reform, which he submitted to the agency on August 8th. The comment is a scathing indictment of Moody&#8217;s processes, conflicts of interests, and management, and it will likely make Harrington a star witness at any future litigation or hearings on this topic.<\/p><\/blockquote>\n<p>His specific allegations:<\/p>\n<ul style=\"color: blue;\">\n<li><b>Moody&#8217;s ratings often do not reflect its analysts&#8217; private conclusions.<\/b>  Instead, rating committees privately conclude that certain securities  deserve certain ratings&#8211;but then vote with management to give the  securities the higher ratings that issuer clients want.<\/li>\n<\/ul>\n<ul style=\"color: blue;\">\n<li><b>Moody&#8217;s management and &#8220;compliance&#8221; officers do everything  possible to make issuer clients happy&#8211;and they view analysts who do not  do the same as &#8220;troublesome.<\/b>&#8221; Management employs a variety of  tactics to transform these troublesome analysts into &#8220;pliant corporate  citizens&#8221; who have Moody&#8217;s best interests at heart.<\/li>\n<\/ul>\n<ul style=\"color: blue;\">\n<li><b>Moody&#8217;s product managers participate in&#8211;and vote on&#8211;ratings decisions.<\/b> These product managers are the same people who are directly responsible for keeping clients happy and growing Moody&#8217;s business.<\/li>\n<\/ul>\n<ul style=\"color: blue;\">\n<li><b>At least one senior executive lied under oath at the hearings into rating agency conduct.<\/b>  Another executive, who Harrington says exemplified management&#8217;s  emphasis on giving issuers what they wanted, skipped the hearings  altogether.<\/li>\n<\/ul>\n<p>(<i>emphasis original<\/i>)<\/p>\n<p>The fact that <b>no<\/b> senior manager on Wall Street has been indicted over this sort of behavior, and they continue to work, and continue to be criminally overpaid, fills me with despair.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>I&#8217;m shocked, shocked to find that gambling is going on here! A former senior VP at Moody&#8217;s has written a detailed layer to the SEC alleging that the ratings agency systematically pressured analysts to uprate crappy derivatives: A former senior analyst at Moody&#8217;s has gone public with his story of how one of the country&#8217;s &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[970,1004],"tags":[],"class_list":["post-185262","post","type-post","status-publish","format-standard","hentry","category-corruption","category-finance"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/185262"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=185262"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/185262\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=185262"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=185262"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=185262"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}