MEPs in a bad Moody over US rating agencies

July 21, 2011 at 2:58 pm Leave a comment

Irish MEPs have joined the growing chorus of criticism throughout Europe against US credit rating agencies, after they downgraded Irish and Portuguese debt to “junk” status earlier this month alongside that of the most embattled eurozone economy, Greece. Fine Gael MEP Jim Higgins urged the President of the European Commission to confirm whether he will set up an EU ratings agency to more accurately assess the economic performance of each country without adding unnecessarily to destabilising market jitters. Commission President José Manuel Barroso was to the forefront of the EU-wide attack on ratings agency Moody’s, claiming the decision to downgrade Portugal and Ireland was “incomprehensible” and suggested an “anti-European bias”.
However Mr Higgins has now called on Mr Barroso to follow through on his words and put a swift end to the activities of US rating agencies in Europe. “They are anonymous companies with vested interests and they make their money by betting against particular economies and then hoping there will be a market swell against them,” said the Fine Gael MEP.
Last year, the EU’s Internal Market Commissioner Michel Barnier announced plans to put North American credit rating agencies under the thumb of an EU agency, and a more detailed proposal on this is expected before the end of the year. In the meantime, Mr Barnier has vowed to consider the option of suspending ratings on EU member countries receiving bailouts, including Portugal, Ireland and Greece.
The three largest US rating agencies Moody’s, Standard and Poor’s and Fitch have already been widely blamed for their role in the financial meltdown, by fuelling the sub-prime mortgage crisis in the States. They are also accused of conflict of interest as they are paid as consultants by the same banks whose debt they rate.

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Entry filed under: Economy and the EU, Financial crisis and the EU, Uncategorized.

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