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Examples
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Moody's, a unit of Moody's Corp., and Standard & Poor's, a unit of McGraw-Hill Cos., both rated some of the instruments, known as CPDO's, when they started being sold in 2006 and 2007.
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"A lot of structured-finance-related unwinds, some related to CPDO structures, are happening behind the scenes," Mr. Mustaro said.
Fear Cycle Ensnares 2008
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Series 8 -- one of the CPDO products that was issued in October 2006 -- is the only one of the three troubled CPDOs that is also rated by Moody's, which has yet to declare its reaction on the matter yet.
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Shareholders certainly feel the CPDO mess has threatened the company's franchisethey've chopped a fifth off its share price since the news broke.
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The products were the first of their kind and were issued by ABN Amro under the bank's Surf CPDO program in 2006.
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The CPDO market was particularly susceptible to data errors because the instruments were quantitative products using borrowed money tied to the ability of corporate borrowers to pay their debts on time.
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Moody's, a unit of Moody's Corp., says it takes the questions about its models and methods seriously, and has hired an outside law firm to review its CPDO ratings processes.
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On Wednesday, Moody's said it has retained law firm Sullivan & Cromwell LLP to review its European CPDO-ratings process.
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But the law firm's review found that Moody's analysts "considered factors inappropriate to the rating process when reviewing CPDO ratings."
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Its move covers all publicly rated CPDOs and includes two transactions that have underlying CPDO exposure.
Investments Tied 2007
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