Defective Moody's Program Issues Billions of Erroneous Aaas

Moody's had a bug in a program used to rate complex debt securities (constant proportional debt obligations, a troubled subsector) in 2006 that led billions to be rated Aaa when they deserved grades as much as four notches lower. But it gets better:

Moody's became aware of the error in early 2007 but did not mark the paper down to its correct level till 2008 when it was downgrading lots of other subprime paper. In other words, it waited until it could cover its tracks.