Another senior Moody’s executive hits out at the firm’s credit ratings strategy
THE former head of compliance overseeing Moody’s credit ratings business was routinely ignored when he warned that the firm was not properly monitoring municipal bond ratings, according to a source close to the executive.
Scott McCleskey, who is due to testify at a US House of Representatives Oversight and Government Reform Committee hearing, said high profile issuers such as New York City, received periodic reviews. But he added that the vast majority of municipal bond issuers were hardly reviewed.
“I feel that in the current economic environment this failure could have far-reaching systemic consequences,” McCleskey said in a March 2009 warning letter to the US Securities and Exchange Commission.
The SEC would not confirm whether it had received the letter.
McCleskey is one of two former Moody’s executives who have alleged that the credit agency favoured revenues over ratings quality.
Eric Kolchinsky, a recently suspended managing director at Moody’s, told Congress in testimony to be released on Wednesday that analysts are “bullied” by managers who override their decisions to generate revenue.
McCleskey said he became aware that virtually no surveillance was being performed on debt issued by states, counties and municipalities.