What Did Moody's Do Wrong, If Anything?
1 What did Moody’s do wrong, if anything?
Legally speaking Moody’s didn’t do anything wrong. However, I am of the opinion that at some point someone in the organization should have listened to their moral radar. Despite them not being responsible for the securities market when the began seeing a decline in the quality of mortgage-backed securities they should have started taking precautionary measures to help prevent the collapse. Even though what they offered to the market was nothing more than their highly rated opinions they essential were the industry standard.
2 Which stakeholders were helped, and which were hurt, by Moody’s actions?
There many organizations that benefited significantly from Moody’s action primarily the securities issuers gain the most and Moody’s was not far behind because they Moody’s who received large returns for better ratings. The group that was hurt most by this was the investors who had spent their money on the strength of Moody’s providing quality unbiased …show more content…
I think that placing a true number on this would be hard since there are other players in the game. However, I do believe Moody’s was a large contributor to the problem. The credit ratings agencies deny that investors look to them to be the experts but the hope is they can provide the resources necessary to make sound investments. They met their legal obligations but failed in their responsibility to provide customers with accurate information that could have caused the to invest differently.
What steps can be taken to prevent a recurrence of something like the subprime mortgage meltdown? In your answer, please address the role of management policies and practices, government regulation, public policy, and the structure of the credit ratings
Legally speaking Moody’s didn’t do anything wrong. However, I am of the opinion that at some point someone in the organization should have listened to their moral radar. Despite them not being responsible for the securities market when the began seeing a decline in the quality of mortgage-backed securities they should have started taking precautionary measures to help prevent the collapse. Even though what they offered to the market was nothing more than their highly rated opinions they essential were the industry standard.
2 Which stakeholders were helped, and which were hurt, by Moody’s actions?
There many organizations that benefited significantly from Moody’s action primarily the securities issuers gain the most and Moody’s was not far behind because they Moody’s who received large returns for better ratings. The group that was hurt most by this was the investors who had spent their money on the strength of Moody’s providing quality unbiased …show more content…
I think that placing a true number on this would be hard since there are other players in the game. However, I do believe Moody’s was a large contributor to the problem. The credit ratings agencies deny that investors look to them to be the experts but the hope is they can provide the resources necessary to make sound investments. They met their legal obligations but failed in their responsibility to provide customers with accurate information that could have caused the to invest differently.
What steps can be taken to prevent a recurrence of something like the subprime mortgage meltdown? In your answer, please address the role of management policies and practices, government regulation, public policy, and the structure of the credit ratings