CRA rotation may reduce competition
Tuesday 24 January 2012 - by Karina Whalley
The European Parliament's Economic and Monetary Affairs committee held a public hearing on Monday and Tuesday where experts argued that stepping up the supervision of credit rating agencies could help to eliminate their conflicts of interest.
But Ross said that several proposed provisions "would have a positive effect on CRA supervision", including rules on disclosure, conflicts of interest, a harmonised rating scale and civil liability for infringements in the third series of regulation since 2009.
Esma was urged to conduct "a broader investigation of CRA's conflict of interest", by German MEP Sven Giegold who proposed setting up public foundations.
The Socialist Group's rapporteur, MEP Leonardo Domenici, called on the European Parliament to think about setting up a European regulatory agency for CRAs. He lambasted the current rating agency rules for having failed and urged for them to be reformed.
Finance Watch secretary general Thierry Philipponnat said "no single opinion should ever be allowed to influence the entire system" as all opinions are "subject to the possibility of error".
He said the use of letters, number and symbols should be forbidden, especially for unsolicited ratings over sovereign debt and only textual arguments should be allowed by agencies.
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