Moodys Investors Service employee testifies about fraud

Here’s the written testimony of Eric Kolchinsky before the Senate Permanent Subcommittee on Investigations last week who, during the majority of 2007, was the Managing Director in charge of the business line which rated sub-prime backed CDOs at Moody’s Investors Service. He was suspended by Moody’s after warning the compliance group regarding what he believed …

Collateralized debt obligations ruined financial market

Complicated portfolios made up of subprime mortgages, known as collateralized debt obligations, or CDOs, received the stamp of approval from rating agencies, but turned out to be a contagion that wreaked havoc on the global economy. Lawmakers are now asserting that credit rating agencies (CRAs) like Moody’s Investors Service and Standard and Poor’s Ratings Services …

Credit-ratings agencies became financial whores

Confirming what most analysts knew, both before and after 2007, a Senate panel investigating the causes of the nation’s financial crisis on Thursday unveiled evidence that credit-ratings agencies knowingly gave inflated ratings to complex deals backed by shaky U.S. mortgages in exchange for lucrative fees. The Senate Permanent Subcommittee on Investigations will hold a detailed …

Saxon Mortgage parent Morgan Stanley sued over CDO

Saxon Mortgage parent company Morgan Stanley has been sued over risky collateralized debts. The lawsuit filed Dec. 24 in Manhattan federal court said Morgan Stanley collaborated with credit rating agencies Moody’s Investors Service and Standard & Poor’s to obtain “triple-A” ratings for notes marketed in 2007 as part of a collateralized debt obligation (CDO) known …