While suing Standard & Poor’s for fraud, states from New Jersey to California ironically are helping fund the world’s largest credit rater’s legal defense by requiring that their pension funds use its rankings.
Investors shouldn’t trust the opinion of Moody’s Investors Service on the U.S.’s Aaa rating and should rely instead on the company’s competitors, according to Pacific Investment Management Co. founder Bill Gross.
Moody’s Corp. will discontinue its use of language seeking to have taxpayers indemnify it against lawsuits related to municipal-bond ratings after states including California and New Jersey complained.
California asked a court to enforce a subpoena against Moody’s Investors Service Inc. that demands documents in an investigation of the company’s evaluations of asset-backed securities linked to subprime mortgages.
When President Barack Obama signed the Dodd-Frank financial reform bill on July 21, he capped a year-long legislative battle to stop $1.8 trillion in global financial writedowns and losses from happening again.
Eric Kolchinsky, the former Moody’s Investors Service analyst who told Congress the ratings company cared more about money than accuracy, was hired by the National Association of Insurance Commissioners.