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Notes to Chapter 11 593

134. Andrew Kimball, internal email, October 21, 2007, attaching memorandum, “Credit policy is-
sues at Moody’s suggested by the subprime/liquidity crisis.” The susceptibility of a ratings committee to
external pressures was shown in the constant proportion debt obligation (CPDO) scandal in Europe.
135. Ibid., p. 3.
136. David Teicher, project manager at Moody’s, interview by FCIC, May 4, 2010; Standard & Poor’s,
“Credit FAQ: The Basics of Credit Enhancement in Securitizations,” RatingsDirect, June 24, 2008.
137. Richard Michalek, testimony before the FCIC, Hearing on the Credibility of Credit Ratings, the
Investment Decisions Made Based on Those Ratings, and the Financial Crisis, session 3: The Credit Rat-
ing Agency Business Model, June 2, 2010, transcript, p. 361.
138. Witt, interview.
139. Clarkson, interview.
140. Fons, interview.
141. Kimball, memorandum, “Credit policy issues at Moody’s,” p. 1.
142. Eric Kolchinsky, testimony before the FCIC, Hearing on the Credibility of Credit Ratings, the In-
vestment Decisions Made Based on Those Ratings, and the Financial Crisis, session 1: The Ratings
Process, June 2, 2010, transcript, pp. 68–69.
143. E Kolchinsky, email to Y Fu and Y Yoshizawa, May 30, 2005.
144. Kolchinsky, testimony before the FCIC, June 2, 2010, transcript, pp. 68–69.
145. Eric Kolchinsky, interview by FCIC, April 14, 2010.
146. FCIC staff estimates, based on analysis of Moody’s SFDRS database.
147. Riachra O’Driscoll, email to Yuri Yoshizawa, subject: “Magnolia 2006–5 Class Ds,” April 27, 2006.
148. Kimball, memorandum, “Credit policy issues at Moody’s,” p. 2.
149. SEC, Office of Compliance Inspections and Examinations, “Examination Report for Moody’s In-
vestors Services, Inc.,” p. 2.

Chapter 11
1. William Dudley, interview by FCIC, October 15, 2010.
2. Inside Mortgage Finance, The 2009 Mortgage Market Statistical Annual, vol. 2, The Secondary Mar-
ket (Bethesda, Md.: Inside Mortgage Finance, 2009), p. 13, “Non-Agency MBS Issuance by Type.”
3. FCIC staff estimates based on Moody’s CDO Enhanced Monitoring System (EMS) database.
4. 2009 Mortgage Market Statistical Annual, 2:373, “Commercial MBS Issuance.”
5. Ben S. Bernanke, chairman of the Federal Reserve, letter to Phil Angelides, chairman of the FCIC,
December 21, 2010.
6. Mark Zandi, Celia Chen, and Brian Carey, “Housing at the Tipping Point,” Moody’s Economy.com,
October 2006, pp. 6–7.
7. CoreLogic Home Price Index, Single-Family Combined (available at www.corelogic.com/
Products/CoreLogic-HPI.aspx), FCIC staff calculations, January to January.
8. CoreLogic Census Bureau Statistical Area (CBSA) Home Price Index, FCIC staff calculations.
9. Data provided by Mark Fleming, chief economist for CoreLogic, in his written testimony for the
FCIC, Hearing on the Impact of the Financial Crisis—Sacramento, session 1: Overview of the Sacra-
mento Housing and Mortgage Markets and the Impact of the Financial Crisis on the Region, September
9, 2010, figures 4, 5.
10. Mark Fleming, testimony before the FCIC, Hearing on the Impact of the Financial Crisis—Sacra-
mento, session 1: Overview of the Sacramento Housing and Mortgage Markets and the Impact of the Fi-
nancial Crisis on the Region, September 23, 2010, transcript, p. 14.
11. Mortgage Bankers Association, National Delinquency Survey, data provided to the FCIC.
12. Ibid., with FCIC staff calculations.
13. FCIC staff analysis, “Analysis of housing data,” July 7, 2010. The underlying data come from Core-
Logic and Loan Processing Svcs. Tabulations were provided to the FCIC by staff at the Federal Reserve.
14. Subprime and Alt-A mortgages are defined as those included in subprime or Alt-A securitiza-
tions, respectively. GSE mortgages included mortgages purchased or guaranteed by Fannie Mae or Fred-
die Mac. FHA mortgages included mortgages insured by the FHA or VA.
15. FCIC staff analysis.