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Execs split on Moody's role in meltdown

NEW YORK, June 2 (UPI) -- Current and former credit rating executives in New York Wednesday offered conflicting views of the role of credit rating agencies in the financial meltdown.

The three premier credit rating agencies -- Fitch's, Moody's and Standard & Poor's -- have been criticized for failing to foresee the housing bubble, which put the financial industry in chaos when it began to bust in 2007, CNNMoney.com reported Wednesday.

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Agencies continued to give high ratings to bundled mortgage-backed securities in part because quality of assessments were secondary to securing business at Moody's, said Eric Kolchinsky, a former managing director of Moody's derivatives division.

"While there was never any explicit directive to lower credit standards, every missed deal had to be explained and defended," Kolchinsky told members of the Financial Crisis Inquiries Commission, which is investigating the cause of the financial meltdown.

Former Senior Vice President of Derivatives Mark Froeba said the company used several techniques to rush ratings through, which lowered the quality of the company's work.

But Moody's Chief Executive Officer Raymond McDaniel said, "We certainly believed we were on top of this and that the information we provided as adequate."

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Billionaire investor Warren Buffett, a major shareholder at Moody's, also testified.

"In this particular case, I think they (Moody's) made virtually the same mistake everyone else made," he said.

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