Apr 21 2010

Moody’s Corp Issued Subpoena!

(10PM EST – promoted by Nightprowlkitty)

Going after some more of the best? of the best? of the best?……… in the financial Meltdown!

Financial crisis panel demands documents from Moody’s

Angered at what it viewed as foot dragging, a special panel charged with getting to the bottom of the nation’s deep financial crisis issued a subpoena Wednesday to compel information from Moody’s Corp.

It was the first such subpoena issued by the Financial Crisis Inquiry Commission, and comes just days before Moody’s CEO Raymond McDaniel Jr. is scheduled to appear before the Senate Permanent Subcommittee on Investigations.

In a statement, FCIC Chairman Phil Angelides and Vice Chairman Bill Thomas accused Moody’s of “failing to comply with a request for documents in a timely manner.”

This just came through the e-box from McClatchy and actually still reading it before I look for more on what’s going on, but they give a pretty good breakdown, as usual, in the video and the report.

The commission had already announced it will hold a special hearing into the credit-rating agencies in the months ahead, and Wednesday issued the subpoena in reaction to the lack of movement by Moody’s on its requests.

“In seeking documents and testimony from public agencies and companies, the commission has made it clear that it is committed to using its subpoena power if there is a lack of, or delay in, compliance,” the statement from Angelides and Thomas said. “Failure to comply with a commission request is viewed with the utmost seriousness, as the commission will not be deterred from getting desired information.”

Because it is a bipartisan commission, the panel needed to have at least six of its 10 members sign off before issuing a subpoena. In an interview at the start of the commission’s work, both Angelides and Thomas told McClatchy that they would aggressively use their subpoena powers where needed.

The subpoena adds intrigue to a much anticipated hearing scheduled for Friday, when the Senate Permanent Subcommittee on Investigations looks into the role of credit-rating agencies in the financial meltdown. –>–>–>

I’d like to see more on these types of actions but finance and the economics can be made a mess to wade through when the best? of the best? cons Ever are working the books etc..

Unlike bringing criminal indictments against the players in the previous administration, but that proof keeps adding up as well, thing is it won’t minimize the blowback if nothing is done!

5 comments

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  1. DOJ should investigate Moody’s on RICO claims – mail fraud & racketeering.  

    Moody’s has been hiding behind “free speech” rights but fraud is not protected.  They were selling AAA ratings like they were french fries at McD – it was a highly lucrative and competitive business.

    McClatchy had a good story on this:

    How Moody’s sold its ratings – and sold out investors

    • jimstaro on April 21, 2010 at 22:30
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    Moody’s profit up 26% amid growth in debt issues

    Moody’s Corp.’s quotescomstock/13*!mco/quotes/nls/mco  (MCO  25.69, – 1.43, – 5.27%)  first-quarter earnings rose 26% as the credit-ratings and research agency benefited from a rise in debt issuance.

    Moody’s has rebounded since credit markets began thawing in 2009, raising the prospect that companies could once again look to bond markets for financing. Moody’s derives about 70% of its revenue from its investor services unit, which rates bonds for corporations issuing debt although that relationship has been called into question for potential conflicts of interest.

    The results “reflected strong activity in corporate and financial institution debt markets, largely driven by high-yield bond and loan issuance,” Raymond McDaniel, Moody’s chief executive and chairman, said in a statement accompanying the earnings. –>–>–>

    But with that we get this.

    Moody’s cautious about rest of 2010, shares down

    Moody’s Corp (MCO.N), a bond rating company, posted better-than-expected first-quarter profit, but cautioned that the high debt issuance that fueled its results may not continue. –>–>–>

    Now I wonder why the cautionary tone?

    I get the feeling that many on the street and elsewhere are trying to play this out to the hilt before their castles come tumbling down completely!

    These are fresh reports from just a couple of the sites in a whole list.  

    • Noor B on April 22, 2010 at 03:19
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    sued ratings agencies, along with several other CDO purveyors and large banks last year.  I believe the suit is still pending.  A commenter on GOS pointed me in the right direction today — the bank apparently didn’t want people to know about this, because it was never noted in any correspondence I ever received from them.  Hell of a way to find out about it.

    These agencies ginned up the ratings of bad securities and sold them to all sorts of institutional investors.  The ratings agencies are fully culpable in the meltdown.  The SEC and DoJ need to hold them civilly and criminally liable. and look for evidence of collusion between the raters, the large banks, and the hedge funds.  At some point, this ought to lead to RICO charges.  

  4. not as good as my insider info:

    https://www.docudharma.com/diar…

    but hey, why should my diary get frontpaged?

    I’m only covering the entire “behinds the scenes” of the Goldman Sachs prosecution 😛

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