One of the great traditions in American business is to punish the few for the sins of the many. It a sort of Scopes Monkey Trial for the subprime mess, the president of Moody’s (MCO), one Brian Clarkson, has been pushed out. The credit rating agency is being vilified for not seeing the crisis coming sooner.
According to The Wall Street Journal, the announcement of Mr. Clarkson’s departure was characteristically vague "While much of the criticism aimed at Moody’s is unfounded, Brian believes that the time is right for new leadership to drive forward the changes we have been making in recent months."
Clarkson did have a great deal to do with the unit of Moody’s which covered subprime paper, but so did scores of other analysts. CEO Raymond McDaniel must have been on a leave of absence while the mortgage derivatives were being evaluated.
The news does not end Moody’s problems. It may be a sign that they are just beginning and that the company want to be see as "doing something" about its issues. Moody’s was the gatekeeper for the credit worthiness of investment vehicles which were extremely dangerous. It did not catch that, and many people beyond Clarkson are likely to suffer the consequences.
Douglas A. McIntyre
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