Many people feel the rating agencies haven’t gotten enough attention, given their linchpin role in the crisis.

I tend to agree, even as we’ve noted and appreciated excellent work over the past couple years, including by the Times’s Gretchen Morgenson, Bloomberg’s Mark Pittman and Jon Weil, the WSJ’s Aaron Luchetti, Jesse Eisinger in the now-defunct Portfolio, among others. Meanwhile Reuters and others have done well to track the Congressional testimony of former rating executives-turned-whistleblowers, like Eric Kolchinsky.

McClatchy’s Kevin G. Hall now expands on what strikes me as a critical issue: the dramatic cultural shift that took place within the raters, in this case, Moody’s, beginning in 2000 at the dawn of the mortgage crisis (although as author Richard Lord has documented, when an early subprime boomlet was already in full swing), shortly after the rater was spun off from Dun & Bradstreet.

The headline points to a main and still under-appreciated problem of the mortgage crisis, as we’ve been arguing for a long time: institutionalized corruption:

How Moody’s sold its ratings — and sold out investors

It goes onto describe a purge of dissidents within the firm as the meltdown gathered force in the spring of 2007:

WASHINGTON — As the housing market collapsed in late 2007, Moody’s Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.

A McClatchy investigation has found that Moody’s punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings.

Pretty straightforward. But, importantly, the story introduces a new whistleblower who details the roots of the problem:

“The story at Moody’s doesn’t start in 2007; it starts in 2000,” said Mark Froeba, a Harvard-educated lawyer and senior vice president who joined Moody’s structured finance group in 1997.

“This was a systematic and aggressive strategy to replace a culture that was very conservative, an accuracy-and-quality oriented (culture), a getting-the-rating-right kind of culture, with a culture that was supposed to be ‘business-friendly,’ but was consistently less likely to assign a rating that was tougher than our competitors,” Froeba said.

Can you prove a cultural shift? It’s hard, but this kind of testimony helps. A careful reading of mortgage crisis coverage reveals similar stories across the financial-services industry, including and especially in mortgage-lending, one described vividly by the late Doris Dungey, aka, “Tanta,” at Calculated Risk.

Froeba was among the victims of such a shift:

After Froeba and others raised concerns that the methodology Moody’s was using to rate investment offerings allowed the firm’s profit interests to trump honest ratings, he and nine other outspoken critics in his group were “downsized” in December 2007.

“As a matter of policy, Moody’s does not comment on personnel matters, but no employee has ever been let go for trying to strengthen our compliance function,” Adler said.

The story discusses how stock options provided incentives to tinker with ratings and, to its credit, holds to account former senior Moody’s executives by name. Here’s an example:

One Moody’s executive who soared through the ranks during the boom years was Brian Clarkson, the guru of structured finance. He was promoted to company president just as the bottom fell out of the housing market.

Several former Moody’s executives said he made subordinates fear they’d be fired if they didn’t issue ratings that matched competitors’ and helped preserve Moody’s market share.

Froeba said his Moody’s team manager would tell his team that he, the manager, would be fired if Moody’s lost a single deal. “If your manager is saying that at meetings, what is he trying to tell you?” Froeba asked.

This is a tricky story because it involves messages, often unwritten and sometimes even unspoken, delivered by bosses to subordinates. These personnel disputes can be messy, but that’s how cultural shifts happen. There’s rarely a smoking gun memo that says, “Starting today, Moody’s will be loosening standards,” so McClatchy deserves credit for wading in here.

Dean Starkman writes and edits The Audit. He is CJR's Kingsford Capital Fellow.