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 Moodyâs Investors Service credit analyst has sued the company, alleging he was fired after his call on a bond rating was trumped by a managerâs concern about how much the bond issuer was paying Moodyâs. Onto specifics: In his complaint, Mr. Bienstock says that on Dec. 4, 2007, he presented Express Scripts debt to a Moodyâs 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 Moodyâs corporate-finance group, called for a revote saying âExpress Scripts doesnât pay us,â and âthey donât visit us and they donât deserve our upgrade.â Mr. Bienstock said he protested, but the committee voted again, this time 6-1 against the upgrade. The problem with committees is that they are prone to group think. Itâs all very well emphasising - as so many financial institutions do and have done - that everything is run through independent committees, but that really means nothing if the culture of the company encourages conformity rather than independence of thought. In Moodyâs, conformity was very much the norm. Itâs changing that culture that is the big challenge for agencies like Moodyâs. Though in the wake of the current crisis, itâs hard to see how rating agencies wonât become more stringent, not least because their survival in the coming years will depend on it. See here for Moodyâs own report on strengthening its analytical quality and transparency. http://ftalphaville.ft.com/blog/2009/03/26/54068/compliance-moodys-style/ Get rid off Moodys and S&P and Fitch.