Credit rating agencies ‘not to blame’ for Euro crisis
Business digest: Lords defends role of Moody’s and its rivals in sovereign debt crisis
The House of Lords has backed credit rating agencies by warning that any attempt to ban them from evaluating bailed-out countries would "smack of censorship".
Moody's, Standard & Poor's and Fitch dominate the credit rating industry and have been criticised for giving the highest AAA rating to financial products that became junk in the wake of the 2008 financial crisis. They have also been accused of exacerbating the sovereign debt crisis in the eurozone by downgrading bailed-out countries such as Greece and Ireland.
EU Internal Market Commissioner Michel Barnier has called for the establishment of a new, publicly funded European rating agency in an attempt to challenge the influence of the big three.
But the House of Lords EU economic and financial affairs committee has defended the agencies saying they "did not precipitate the crisis, nor do we believe it is possible to say with any certainty that they exacerbated it".
They add: "Commissioner Barnier's proposal that sovereign debt ratings be suspended for countries in international financial assistance programmes is wholly impractical and smacks of censorship."
However, the committee did recommend that Barnier instigate a competition inquiry into the rating industry.
Read a full report at Reuters. ·
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