EU Urged To Grasp The Nettle Of Ratings Agency Regulation

New EU rules to prevent a fresh crisis hitting Europe’s 8,000 banks won support today from the main progressive group in the European Parliament. But urgent measures were needed to bring ratings agencies under control, said the economic and monetary affairs spokesman of the 185-strong Socialists and Democrats group, Udo Bullmann.

Welcoming Commission proposals on capital requirements for banks, Mr Bullmann said: “Europe is giving a lead by being the first part of the world to give internationally-accepted standards the force of law. Our group’s focus will now be on making sure that the EU does not mix up two important questions. It should separate measures on limits to risk-taking from action to ensure effective access to capital for small- and medium-sized banks.

“I am dismayed by the failure of the European Commission’s proposals today to grapple effectively with the problem of ratings agencies. It is not acceptable for three ratings agencies, operating in shadowy ways, to wield so much influence on more than 90 per cent of the market. We need more competition between ratings agencies and, in particular, the creation of a European public ratings agency. We also need urgent proposals for regulation to make the work of these agencies more transparent and to clarify the criteria they apply.

“It is not good enough for the Commission to promise more action in the autumn. It needs to be more dynamic and to grasp the nettle of regulation now. Our economies are paying the price for inaction and I call on Commissioner Barnier to give this matter immediate attention.”