Coding Flaws Caused Moody's Debt Rating Errors

An anonymous reader writes "The Financial Times has the story that billions in incorrect AAA ratings given out by Moody's were the result of a coding error in its computer models. 'Internal Moody's documents seen by the FT show that some senior staff within the credit agency knew early in 2007 that products rated the previous year had received top-notch triple A ratings and that, after a computer coding error was corrected, their ratings should have been up to four notches lower.'"

Comments

Re:Likely a feature

[Thelasko]

One possible explanation is that Moody's code was initially correct but they introduced the "bug" to make sure they were providing the same valuations as S&P. I wouldn't be surprised if S&P also introduced a "bug" to make their ratings match Moody's. The whole thing reeks of the method the RIAA uses to pick the top 40 songs, Payola.

I think the parent is correct, in its allusion. The creator of said "bug" could stand to make quite a bit of money doing so intentionally.

re: not err

[ed.han]

while i disagree that even more regulation is needed in the financial services industry (SOX, anyone?), i'm worried about the imminent bloodletting as people try to find even safer investment vehicles--and the inevitable billions in lawsuits that will be filed in the coming weeks.

Re:You Gotta Be Joking

[maxume]

Drug use is alive and well in the US, and aging well:

http://www.sciam.com/article.cfm?id=when-im-sixty-four

Re:After the OpenSSL bug

[Cal Paterson]

Posting to undo moderation. Silly web 2.0 moderation.