Moodys former compliance officer testified to the House Oversight and Reform Committee last month that Moodys did no surveillance of its muni ratings. They issued them and then left them static although they continued to bill the issuer.

This means that retail investors who were sold those securities had no specific or general sense of the accuracy of the rating or the pricing that derived from the rating.

I’m sure that once the ratings are available for analysis we will see lots of market and academic scrutiny of ratings accuracy. Long overdue.

The SEC is requiring the raters to expose the histories in XBRL for more ready comparison. Here is a presentation that I gave at a conference at the FDIC last month on the topic:

http://shopyield.com/2009/10/06/xbrl-and-credit-ratings/