March 18, 2009
Buffett silent on Moody’s mistakes
Billionaire investor Warren Buffett, in spite of his considerable candor, has steered clear of a controversy surrounding U.S. rating agencies, observers say.
Buffett owns 20 percent of Moody's Corp., which earns billions in fees rating corporate debt. He has been quiet on the topic of how wrong Moody's and other rating agencies have proven to be in the wake of the global financial crisis, The New York Times reported Wednesday.
The big three financial ratings agencies routinely gave their seal of approval to subprime mortgage securities that have gone toxic.
At the heart of the matter is rating companies, including Standard & Poor's and Fitch Ratings, earning fees from the same corporations they are rating, the newspaper said.
Warren deserves credit for his candor in admitting mistakes, said Alice Schroeder, author of a Buffett biography called,
But he chooses which mistakes to discuss. It also pays to listen for the 'dog that didn't bark,' she said.