Compliance, Moody’s style

The complicity of the rating agencies in the current financial mess is well documented. One of the major protestations from the agencies in response to various accusations, however, has been their robust internal checks and balances, which, clients and regulators are assured, make sure everything is done by the book.
Today though, another nail in the coffin of that particular trope. From the WSJ:

A former Moody’s Investors Service credit analyst has sued the company, alleging he was fired after his call on a bond rating was trumped by a manager’s concern about how much the bond issuer was paying Moody’s.

Onto specifics:

In his complaint, Mr. Bienstock says that on Dec. 4, 2007, he presented Express Scripts debt to a Moody’s committee for an upgrade from a speculative Ba1 to an investment-grade rating of Baa3, based on improved company performance. Mr. Bienstock alleges that the committee voted 5-2 for the upgrade, but his supervisor, Patrick Finnegan, the ratings committee chairman and then director of Moody’s corporate-finance group, called for a revote saying “Express Scripts doesn’t pay us,” and “they don’t visit us and they don’t deserve our upgrade.”

Mr. Bienstock said he protested, but the committee voted again, this time 6-1 against the upgrade.