Moody's Plans to Cut Structured Finance Jobs

More market professionals are about to lose their jobs, because of the crippling slowdown in new asset securitization business. This time, Moody's Investors Service is planning to slash 20% of the personnel from its structured finance group, according to an industry source, who said the layoffs will affect MBS and ABS teams alike. Rating agencies have come under widespread criticism for what industry sources say was a failure to issue accurate and timely assessments of risks underlying many mortgage-backed securities products. As a group, the rating agencies have downgraded or put on negative watch more than $55 billion in mortgage-related ABS and have reworked rating methods for a wide range of structured finance products. Officials at Moody's declined comment about what job cuts might specifically affect the ABS and MBS groups. Following months of volatility in the MBS sector, Moody's had announced that it would cut between 5% and 10% of staff across the entire company globally, but had given any specifics beyond that, said a source familiar with the company. In its third-quarter results, Moody's reported that global structured finance revenue totaled $200.8 million for the third quarter of 2007, a decrease of 6% from a year earlier. U.S. structured finance revenue fell 14%, with strong growth from rating commercial mortgage-backed securities more than offset by declines across all other asset classes, led by a 52% decrease in revenue from rating residential mortgage-backed securities. The dearth of new business is equally responsible for the coming job losses at Moody's, said a source. "It is so quiet over there," he said.