Moody's Still Rewarded for Showing Up: Street Whispers

NEW YORK (TheStreet)--If there was one company many people thought would get upended by the crisis, it was Moody's Investors Corp(MCO) .

The top ratings its analysts gave to complex, risky bonds, allowed them to be sold into the marketplace, caused losses throughout the financial system too large to count.

In one instance, the ratings agency gave triple-A ratings to billions of dollars' worth of bonds that should have been four notches lower due to a computer glitch. Still, upon finding out about the glitch in early 2007, Moody's kept the ratings in place until January 2008, the Financial Timesreported. Moody's eventually acknowledged the error and disciplined certain employees.

Lawsuits followed, but so far they haven't made much of a dent in Moody's share price. There was the Public Employees' Retirement Systems of Mississippi, for example, which argued in 2008 that Moody's was responsible for duping them into buying $63 billion of investment-grade mortgage-backed securities. Moody's got the case thrown out, however, since the plaintiffs claimed Moody's effectively acted as an underwriter of the bonds. But even Judge Jed Rakoff, about as sympathetic a judge as the plaintiffs could have hoped for, concluded that argument didn't fly.

The plaintiffs had to take that tack because Moody's has hid behind the first amendment, successfully claiming its ratings opinions are protected as journalism. The 2010 Dodd Frank law subsequently took away those protections.

And yet Moody's, while hiding behind journalists' first amendment protections for one last crisis, has done a far better job of making money than most journalism enterprises. Profits have steadily grown at Moody's, and in 2011 were up more that 40% from their lows in 2009. Meanwhile, The New York Times Co.(NYT) has gone from a meager profit to a loss during the same time frame. While The Washington Post Co.(WPO) has shown earnings growth over that two year period, it has been choppy, a record that is reflected in its share price. While shares of both the Times and the Post and have declined more than 50% in the past five years, Moody's shares have lost just under 2%.