Wednesday, May 21, 2008
As a former software engineer (the real kind, not the "Microsoft Certified" variety that I understand has denigrated that title in recent years) I couldn't resist writing the headline you see above.
It came after reading this story in the Financial Times about a coding error at Moody's that resulted in incorrectly rating CPDOs (not to be confused with C3POs):
Moody’s awarded incorrect triple-A ratings to billions of dollars worth of a type of complex debt product due to a bug in its computer models, a Financial Times investigation has discovered.They should have done more thorough code reviews - latent defects are much more costly than most deadline-obsessed managers realize. I should know - I had a few doozies in my day (yes, both latent defects AND deadline-obsessed managers).
Internal Moody’s documents seen by the FT show that some senior staff within the credit agency knew early in 2007 that products rated the previous year had received top-notch triple A ratings and that, after a computer coding error was corrected, their ratings should have been up to four notches lower.
News of the coding error comes as ratings agencies are under pressure from regulators and governments, who see failings in the rating of complex structured debt as an integral part of the financial crisis. While coding errors do occur there is no record of one being so significant.
In the case of Moody's, however, the managers may have been obsessed with more than just deadlines.