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Ex-Officer Moody’s warned the SEC about the omissions in the work of the agency

former employee of the rating agency Moody’s Investors Service in March this year, warned the Commission on the Securities and Exchange Commission, SEC, weaknesses in the control of the agencies for municipal bonds. This happened after the Moody’s leadership ignored his report, reports Associated Press.

former senior vice president of Moody’s Makkleski Scott (Scott McCleskey) wrote a letter to the SEC which referred to “the absence of observations of municipal securities, which is contrary to Moody’s reports on the subject of the American public and Congress”.

Makkleski will testify at a hearing in U.S. Congress to change the rules of the game for rating agencies, which are “inflated” the value of securities before and after the financial crisis. At the hearing, will make another former Moody’s analyst Eric Kolchinsky (Eric Kolchinsky), alleged that this agency continues to inflate their estimates and, moreover, covered by a conflict of interest.

rating agencies Moody’s, Standard & Poor’s and Fitch Ratings harshly criticized for failing to identify risks in securities which are secured by mortgages “subprime”. According to many experts, it became one of the causes of the global financial crisis. In the current financial system, credit rating agencies play a vital role in assessing the creditworthiness of public companies and the value of their securities.

U.S. regulators say they hope to encourage competition in the industry both at the expense of new companies and by strengthening the role of the seven other rating agencies. They must challenge the three dominant firms in the market. In addition, SEC intends to require the disclosure of sources of information used for changing the order or ranking. By meniyu regulator, it would eliminate the “buy” ratings of public companies.

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