Moody’s ‘regularly ignored’ compliance chief’s advice

The former head of compliance at credit ratings agency Moody's today claimed that he was regularly ignored when he warned that the firm was not properly monitoring the ratings on municipal bonds.

Scott McCleskey will testify to a Congress committee investigating the ratings industry later today.

He said in a letter, sent to America's Securities and Exchange Commission last March, that although high-profile bond issuers such as New York City were regularly reviewed the vast majority of municipal issuers were not. "I feel that in the current economic environment this failure could have far-reaching systemic consequences," he wrote.

"While I was there, I found that my guidance was routinely ignored if that guidance meant making less money."

He also claimed that even when Moody's, prompted by the credit crisis, began to tackle the issue of municipal bond ratings, the size of the team was inadequate to look at all the issuers of bonds.

McCleskey also claimed that some municipal bonds had not been reviewed at all more than 20 years after they were first issued.