Wednesday, July 2, 2008

Moody's blames ratings fiasco on a "bug"

I guess the hedge funds that were short this crap didn't have it in their algorithms. Here's the story. Their excuse makes me want to barf:

Moody’s is moving to re-examine the accuracy of all its computer models and place them under a centralised monitoring system after it formally acknowledged earlier this week that a glitch had appeared in one such mathematical model used to rate complex products....

The moves come after the agency admitted on Tuesday that a “coding bug” had led the agency to incorrectly award top notch triple-A ratings to about $1bn of complex instruments known as constant proportion debt obligations (CPDOs) in 2006. This bug was first revealed in an FT investigation in May.

Moody’s on Wednesday said that it hoped that the planned changes to its model surveillance should now reassure investors and stressed that it believed that the problem with the CPDO bug was an isolated incident.

http://www.ft.com/cms/s/0/65b07074-486a-11dd-a851-000077b07658.html

No comments: