Moody’s Waited A Year Before Fixing Ratings

We’re surprised as you are to hear ourselves parroting New York senator Charles Schumer but that’s what it’s come to: the truly shocking thing about yesterday’s Financial Times report on Moody’s screwing up the ratings on complex debt derivatives is that it took Moody’s nearly a year to fix the problem after it was discovered.
“The ratings inaccuracies that were disclosed are deeply troubling,” Schumer wrote in a letter sent to the Securities and Exchange Commission yesterday. “However, the fact that Moody’s only downgraded these incorrectly rated products in January of 2008, nearly a full year after they became aware of the problem, is much worse, and is indicative of a culture of shirking responsibility that must end.”
Moody’s says it has employed Sullivan & Cromwell, the white shoe law firm right next door to Goldman Sachs, to conduct an external review. That’s wonderful but, again, why did it take a report from the Financial Times to prompt the review?
Moody’s launches review in wake of errors [Financial Times]

Moody’s Multi-Billion Computer Bug

As it turns out, our robot overlords are destroying human civilization.

Moody’s awarded incorrect triple-A ratings to billions of dollars worth of a type of complex debt product due to a bug in its computer models, a Financial Times investigation has discovered.
Internal Moody’s documents seen by the FT show that some senior staff within the credit agency knew early in 2007 that products rated the previous year had received top-notch triple A ratings and that, after a computer coding error was corrected, their ratings should have been up to four notches lower.

Simple question: If a computer bug is Moody’s excuse, why did these things get triple A ratings from Standard & Poor’s also?

CPDOs expose ratings flaw at Moody’s
[Financial Times]