Moody’s whistleblower to testify next week

Eric Kolchinsky, a former CDO analyst at Moody’s, is expected to accuse the rating agency in a congressional hearing next week of letting revenue concerns influence credit ratings and mis-rating structured debt that it knew would soon be downgraded. According to reports, he has submitted a memo to the House Committee on Oversight and Government Reform which accuses the agency of continuing to give tranches of CLOs investment grade ratings after deciding to update its CLO methodology late in 2008, when it knew that those ratings would be downgraded to junk after the new methodology came out.