Moody’s Credit Ratings
and the SubprimeMortgage Meltdown
Read the case and answer five questions. You can also use sources from the internet to answer questions.
Each question should be provided detailed answers.
The answers should be at least six pages in length (for all questions together) and should not exceed eight pages. The length can vary for each question, that is for some questions but together the assignment should be at least six pages in length. The answers should be doubled spaced and please use 12″ font size.
Q1. What did Moody’s do wrong, if anything?
Q2. Which stakeholders were helped, and which were hurt, by Moody’s actions?
Q3. Did Moody’s have a conflict of interest? If so, what was the conflict, and who or what were the principal and the agent? What steps could be taken to eliminate or reduce this conflict?
Q4. What share of the responsibility did Moody’s and it’s executives bear for the financial crisis, compared with that of home buyers, mortgage lenders, investment bankers, government regulators, policymakers, and investors?
Q5. 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 practicalities, government regulation, public policy, and the structure of the credit ratings and industry.