According to both Thursday's Wall Street Journal and Thursday's Financial Times, Connecticut attorney general Richard Blumenthal has brought suit on behalf of his state against the three major credit-rating agencies charging that they falsely gave low ratings to debt instruments of states, cities and other public agencies such as school boards, prisons, roads, etc. Blumenthal sued for Conneciticut, charging that Moody's, S&P and Fitch "systematically and intentionally" caused the state to be charged higher insurance rates than was warranted. Other states were dealt the same bad hand, and many of them are now considering similar charges against the rating agencies in their jurisdictions. Moodys is the only publicly held company among the three. Its largest shareholder is warren Buffet's Berkshire Hathaway, not a good call.
Moody's also released this week its expectations for the next half year, very soggy, indeed.
The New York Times of July 2 reported that Moody's had admitted "errors" in the ratings of some European securities, giving them triple A standing when they merited much lower assessments.
It is obvious that Moody's and its comrades were in cahoots with MBIA and Ambac (from both of whose declines I have profited and will profit some more) in downgrading public instruments and up-grading to a ridiculous and criminal degree mortgages and other private debt securities. The whole world is now suffering from this behavior. Justice has not yet been done to the reckless creators of what is nothing less than a calamity probably touching the lives of hundreds of millions of people. Capitalism at its worst, very worst.