Moody's says no knowledge of possible government suit
Credit-ratings company Moody's doesn't believe it is the subject of any "impending" US lawsuit over its ratings of mortgage bonds ahead of the 2008 crisis, the company's chief executive said Friday.
Moody's chief executive Ray McDaniel characterized recent interactions with regulators as routine, after repeated questions from analysts on an earnings conference call about the Department of Justice's lawsuit against larger peer, Standard & Poor's.
"We don't have any knowledge of any impending complaint by the Department of Justice raising similar claims against Moody's," McDaniel said.
McDaniel noted Moody's was not named in the Department of Justice's suit against S&P.
On Tuesday, the department accused S&P of having knowingly exaggerated ratings on mortgage securities in 2007 in exchange for winning continued revenues from issuers.
Government officials said S&P's actions caused at least $5 billion in losses to federally insured institutions which bought the securities, which eventually fell into default, contributing to the 2008 financial crisis.
Moody's shares have lost more than 20 percent of their value since the S&P suit surfaced, a decline that suggests the market believes Moody's will be implicated in a similar action.
Shares were off 6.3 percent Friday alone.
McDaniel said he has "no basis to comment" on the S&P suit. He said Moody's receives inquiries from regulators on an "ongoing" basis to which it "routinely" responds.