The external review of the Moody's CPDO scandal has now been concluded, and as a result Moody's says that it "has initiated employee disciplinary proceedings". Such proceedings, it would seem, include firing the head of structured finance, Noel Kirnon.

Moody's (MCO) is, however, being less than transparent about what exactly these people did wrong, saying only that "some committee members considered factors inappropriate to the rating process when reviewing CPDO ratings following the discovery of the model error". In doing so, it seems to quarantine any blame at the level of the European CPDO monitoring committee, of which Kirnon was presumably a member. There's no indication that there may have been broader problems with the whole way that structured products were rated, or with the increasingly-close relationship between Moody's and its clients.

In other words, there's something rather unsatisfying here. Does anybody really believe that the problems with European CPDOs were confined to the European CPDO monitoring committee, and were utterly absent elsewhere? That's the Moody's spin, and it is rather lacking in credibility.

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Felix Salmon

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