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data, and that motivated Moody to create his rating system and the U.S. govern-
ment to create the Federal Reserve System.
Moody's Analytics has developed proprietary software for financial modeling,
risk analysis, and other business-related topics. It also has a consulting group in
the same areas. The Moody's Analytics subsidiary is a kind of umbrella organ-
ization that was used to combine a number of formerly independent companies,
including, but not limited to, KMV, which has a software package for predicting
credit defaults; Economy.com (economic modeling); Wall Street Analytics; Fer-
mat International, the Institute of Risk Standards and Qualifications; CSI Global
Education; and others.
The latter company, CSI Global Education, handles training and education in
stocks and bonds and other financial securities. It also certifies professionals who
handle and market such securities. This is a Canadian company and its courses are
required for all Canadian stock and investment professionals.
Several of the other Moody's Analytics umbrella companies also provide train-
ing in various countries, but always in the fields of stocks, bonds, and financial
instruments.
In the modern world, credit ratings are critical factors for companies and indi-
viduals alike. The mathematics and statistics for calculating these ratings are out-
side the scope of this topic, but they have serious impacts on individual and cor-
porate abilities to borrow or receive external funding.
In 2010, Moody's Analytics formed a partnership with Experian to produce a
software package for allowing financial institutions to manage portfolios of con-
sumer loans. Although computers and software are the key tools for credit ratings
and risk analyses, they are not perfect by any means. There have been frequent
criticisms of their accuracy, and some government investigations have begun.
There was intense criticism of three rating companies—Moody's, Standard and
Poors, and Fitch's—due to their favorable ratings of financial companies that later
became insolvent, such as Lehman Brothers, and also for risky mortgage-related
packages that were implicated in the burst housing bubble.
There is no “cesium atom” or truly objective mathematical method for determ-
ining the accuracy of a credit rating, which is why several independent rating agen-
cies are used and their results are compared.
The credit-rating financial software packages have also been known to contain
bugs and defects, as do all other kinds of software applications. The credit-rating
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