Moody’s is about to release earnings. Ponder this Bear Case Scenario.
After the mortgage crisis the entire ratings industry took a reputational beating and quite rightfully so. But they survived but hopefully everyone has learnt to read their reports a little bit more closely.
If the market and economy dips Moody’s and others may take a few more slaps in the face which means more lawsuits.
Olde lawsuits are still out standing and it would be nice for shareholders to know they are settled. Just lawyers making fees for no good reason.
What is really left to generate growth. Ratings are ordered up when capital is issued. If deals requiring ratings slow then new fees will wither.
This company will be so easy to sue in the future for the slightest little miscue.
George Gutowski writes from a caveat emptor perspective.