R&R Consulting » Moody’s Investors Service

Raynes in McClatchy Article on Moody’s Moral Sell-Out

R&R Consulting — Mon, 19 Oct 2009 20:30:09 +0000

R&R Consulting principal Sylvain Raynes is quoted in a ground-breaking expose by McClatchy Newspapers on how Moody’s compromised the integrity of its credit ratings:

“As the housing market collapsed in late 2007, Moody’s Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression…

“‘In my days, I was pressured to do nothing, to not do my job,’ said [Sylvain] Raynes, who left Moody’s in 1997. ‘I saw in two instances — two deals and a rental car deal — manipulation of the rating process to the detriment of investors.’”

Read the full article by Kevin G. Hall, “How Moody’s sold its ratings — and sold out investors,” McClatchy Newspapers, October 18, 2009.

Raynes: Kolchinsky Testimony Could Bring Down Moody’s

R&R Consulting — Wed, 23 Sep 2009 22:11:45 +0000

Business bloger Yael Bizouati interviewed R&R’s Sylvain Raynes about former Moody’s analyst Eric Kolchinsky’s testimony on ratings-firm reform before the House Committee on Oversight and Government Reform. Raynes says Moody’s should be “put out of its misery” for its “pattern of fraud,” and describes a deal he witnessed that he considered fraudulent. Read “Moody’s Insider Explains the Workings of a Deal He Calls Fraudulent“ and “Former Moody’s Insider Says ‘Moody’s Should be Terminated’” at Clusterstock.

Sylvain Raynes Quoted in NYT Feature on Moody’s

admin — Sun, 07 Dec 2008 00:32:00 +0000

“The mistaken notion that Moody’s was a company like any other, that was very fundamental,” said Sylvain Raynes, a former Moody’s analyst who is co-founder of R&R Consulting, a firm that helps investors gauge debt risks. “It is not just a profit-maximization entity like Exxon or Microsoft. Moody’s has a duty to the American public. People trusted it.”

Gretchen Morgenson, “Debt Watchdogs: Tamed or Caught Napping?” The New York Times, December 7, 2008

Financial Times Interviews R&R’s Raynes and Rutledge about Moody’s

admin — Tue, 04 Nov 2008 11:33:00 +0000

“In the late ’90s, research and development at Moody’s slowed right down,” says [Ann] Rutledge. “The banks caught up. And then they came to be the ones in the lead.” As the structured finance arms race accelerated, Moody’s and its peers became more passive participants. Where the firm had once been at the cutting edge of statistic analysis (analysing facts) and stochastic analysis (analysing probabilities), soon it found itself trying to keep pace with the latest engineering packages devised by the banks.

“Over time, disagreements with analysts were just smoothed out. And it was no longer the rating agency which always won,” says [Sylvain] Raynes, who left Moody’s to set up his own credit analysis consultancy. “The banks won. Now the modelling is done by the street.”

The agencies were inundated with a huge volume of new structured finance deals that they were being asked to rate. At Moody’s, the flipside to the huge revenue growth was a high-pressure work environment. One analyst recalls rating a $1bn structured deal in 90 minutes. “People at the rating agencies used to say things like, ‘I can’t believe we got comfortable with that deal,’” says Raynes. “People talk about moral hazard at the banks, but the moral hazard for the rating agencies is extreme.”

Read the rest of this full-feature article at Financial Times, “When Junk Was Gold,” by Sam Jones.

R&R in the Media – The New York Times

Stacy Mosher — Thu, 03 Jul 2008 13:26:00 +0000

R&R’s Sylvain Raynes is quoted in a New York Times article regarding disciplinary action by Moody’s against employees alleged to have violated the company’s code of conduct in rating European securities.

Article excerpt:

“Already under intense scrutiny for its role in the credit crisis, the Moody’s Corporation said Tuesday that some employees had violated its code of conduct in rating complex European securities.

“The company said that it would discipline and possibly fire employees who had been involved in rating the debt, which are known as constant proportion debt obligations. Separately, Moody’s said it was replacing the executive, Noel Kirnon, who was in charge of its structured finance business at its subsidiary, Moody’s Investors Service…

“One former Moody’s analyst who has worked with Mr. Kirnon praised him and said he appeared to be taking the fall for mistakes made by others. ‘He was a very thoughtful and very competent analyst,’ said the former analyst, Sylvain Raynes, a financial consultant who has been critical of the ratings firms.”

“Moody’s Says Workers Rated Some Securities Incorrectly,” New York Times, July 2, 2008