18 Facts About Moody's

Moody's was founded by John Moody in 1909 to produce manuals of statistics related to stocks and bonds and bond ratings.

Especially since the early 2000s, Moody's frequently makes its analysts available to journalists, and issues regular public statements on credit conditions.

Moody's purchased a controlling share in the "climate risk data firm" Four Twenty Seven in 2019.

In 1913 he expanded the manual's focus to include industrial firms and utilities; the new Moody's Manual offered ratings of public securities, indicated by a letter-rating system borrowed from mercantile credit-reporting firms.

Moody's expanded its focus to include ratings for US state and local government bonds in 1919 and, by 1924, Moody's rated nearly the entire US bond market.

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On July 10,2007, in "an unprecedented move", Moody's downgraded 399 subprime mortgage-backed securities that had been issued the year before.

Moody's has occasionally faced litigation from entities whose bonds it has rated on an unsolicited basis, and investigations concerning such unsolicited ratings.

Moody's rating raised the issuing cost to Jefferson County by $769,000.

Moody's argued that its assessment was "opinion" and therefore constitutionally protected; the court agreed, and the decision was upheld on appeal.

Moody's has pointed out that it has assigned unsolicited ratings since 1909, and that such ratings are the market's "best defense against rating shopping" by issuers.

In November 1999, Moody's announced it would begin identifying which ratings were unsolicited as part of a general move toward greater transparency.

The SEC recently acknowledged in its September 30,2011 summary report of its mandatory annual examination of NRSROs that the subscriber-pays model under which Moody's operated prior to adopting the issuer pays model "presents certain conflicts of interest inherent in the fact that subscribers, on whom the NRSRO relies, have an interest in ratings actions and could exert pressure on the NRSRO for certain outcomes".

Moody's has maintained that its reputation in the market is the balancing factor, and a 2003 study, covering 1997 to 2002, suggested that "reputation effects" outweighed conflicts of interest.

In March 2021, Moody's reached a settlement with the European Union regarding alleged conflicts of interest.

In October 2007, Moody's further refined its criteria for originators, "with loss expectations increasing significantly from the highest to the lowest tier".

In May 2008, Moody's proposed adding "volatility scores and loss sensitivities" to its existing rankings.

Moody's has in fact lost market share in certain sectors due to its tightened rating standards on some asset-backed securities, for example the commercial mortgage-backed securities market in 2007.

In January 2017, Moody's agreed to pay nearly $864 million to settle with the Department of Justice, other state authorities and Washington.