Former Moody’s Executive Attacks Ratings Agencies

William Harrington, a former senior president at Moody’s Investor’s Services, was sharply critical of how Moody’s and the other rating agencies conduct business. He claimed that the organization’s senior management would routinely interfere with analysts’ assessments.

Mr. Harrington, who resigned in 2010 after 11 years with Moody’s, said in a statement filed with the Security and Exchange Commission (SEC) that Moody’s had a culture of “intimidation and harassment” to ensure analysts awarded ratings that were wanted by clients. He said that the compliance department would “actively harasses analysts viewed as ‘troublesome.’”

He continued to explain that, “This salient conflict of interest permeates all levels of employment, from entry-level analyst to the chairman and chief executive officer of Moody’s corporation.”

In his 78-page filing, he also said, “The goal of management is to mold analysts into pliable corporate citizens who cast their committee votes in line with the unchanging corporate credo of maximizing earnings of the largely captive franchise.”

Mr. Harrington’s opinion must be taken in the context of a former employee.

Brian Clarkson Vague About His Time As Moody’s President

The New York Times reported on the private testimony Brian Clarkson gave to the Financial Crisis Inquiry Commission (FCIC) in May 2010. Mr. Clarkson was president of Moody’s Investors Service until his retirement in 2008. His FCIC testimony was recently made public.

Commissioners asked Mr. Clarkson about former Moody’s analysts who testified during congressional hearings that executives bullied them into assigning triple-A ratings. Analysts complained that those who did not cooperate were either terminated or suspended.

Mr. Clarkson said that he did remember complaints about how some of Moody’s analysts were “not playing ball with Wall Street.” However, Mr. Clarkson could not “recall specific bankers” who complained or personnel changes that resulted from the complaints. He said that he personally did not fire anyone, and could not recall any discussions about firing employees.

When Mr. Clarkson was asked if Moody’s extended discounts to banks that sought ratings, The New York Times reports that he replied, “I don’t know.” When asked about Moody’s changing the prices that it charged Wall Street in 2001, Mr. Clarkson said, “I don’t recall specific fee structures.”