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Moody's Analyst Breaks Silence: Says Ratings Agency Rotten To Core With Conflicts, Corruption, And Greed

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

A former senior analyst at Moody's has gone public with his story of how one of the country's most important rating agencies is corrupted to the core.

The analyst, William J. Harrington, worked for Moody's for 11 years, from 1999 until his resignation last year.

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's issued during the housing bubble.

.......

The primary conflict of interest at Moody's is well known: The company is paid by the same "issuers" (banks and companies) whose securities it is supposed to objectively rate. This conflict pervades every aspect of Moody's operations, Harrington says. It incentivizes everyone at the company, including analysts, to give Moody's clients the ratings they want, lest the clients fire Moody's and take their business to other ratings agencies.

.......

Moody's ratings often do not reflect its analysts' private conclusions. Instead, rating committees privately conclude that certain securities deserve certain ratings--and 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.

I doubt anyone on here will find any of this shocking, however from the legal perspective this must be dynamite to some lawyers.

Luckily no one has broken any law.

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

I doubt anyone on here will find any of this shocking, however from the legal perspective this must be dynamite to some lawyers.

Luckily no one has broken any law.

No shock to hear this! It just means that if they DO actually say something is sh*t then, boy it must be below that.

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We've always suspected this of course. However this comment was interesting..

More like Self-preservation. Rats leaving a sinking ship. More to come.

Three Federal Reserve officials are starting to speak out about why they disagree with Chairman Ben Bernanke on the central bank's latest policy move.

Starting to fall apart, methinks, like the old Soviet Union.

Moody's is controlled by Buffet, for Buffet, and to Buffet's advantage. Did anyone expect Moody's to downgrade Wells Fargo's worthless HELOCs or downgrade the Goldman Sachs subprime CDOs when Buffet was holding a $5 billion stake in GS preferred stock?

:blink:

Edited by John Steed

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We've always suspected this of course. However this comment was interesting..

Starting to fall apart, methinks, like the old Soviet Union.

Political posturing, they know the writings on the wall so they are positioning themselves to challenge to be the new head.

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Luckily no one has broken any law.

You sure?

UK law is famously flexible to accommodate the right kind of people. But not everywhere is the same, and the US has a track record of taking a tough line on (at least some forms of) "white-collar" crime.

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http://www.businessi...nd-greed-2011-8

I doubt anyone on here will find any of this shocking, however from the legal perspective this must be dynamite to some lawyers.

Luckily no one has broken any law.

Don't huge Pension funders/others buy all this high rated junk?

The City fraudsters running it don't give a toss either way cos they get paid fees no matter what - which is another 'legal' fraud (then they disappear off the scene decades before you call upon your pension.)

No wonder pensions offer lower and lower returns at the end!

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Luckily no one has broken any law.

Well until someone- anyone- gets prosecuted and found guilty this is technically correct I guess- which is why banking apologists can keep on saying it.

But you have to imagine that in an industry that -more than most- runs on trust there will come a point where the sheer ubiquity of corruption will become a fatal obstruction to the process- the 'credit crunch' was ultimately a story of mutual mistrust.

At what point does the rational player realise that the only winning move is not to play?

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  • 337 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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