Its fair to say that when rating agencies recalibrated their muni ratings in Q2 2010 to bring them in-line with other debt types, they did not conduct a credit review. Instead they unilaterally upgraded nearly all ratings at a time when all municipalities face serious financial & headline risk. We base our opinion on congressional testimony by Scott McCleskey, former head of compliance at Moody’s from 4/ 2006 to 9/ 2008 who said “in some cases there were bonds which had been outstanding for 10 or 20 years but which had never been looked at since the original rating”
Take a look or listen to “Credit Rating Agencies and the Next Financial Crisis,”hearing information. House Oversight and Government Reform Committee’s hearing . Really fascinating info that examines what role inaccurate credit ratings played in the current financial crisis, and what regulatory changes need to be implemented to prevent a future collapse.
Here is a webcast of that meeting