Credit Rating Agencies
Not so long ago, voices were raised to say that rating agencies should not have downgraded Greek and other bonds. "Look what it has done to the Euro?" they said.
I was going to say: "Does any more need to be said to prove the huge conflict of interest that there would be if countries effectively rated their own debt?"
But then this morning in the debate on statistics, Commissioner Rehn said yesterday's downgrade by Moody's was not conveniently timed and that would influence Commission thinking on credit rating agencies.
I'm sorry, I can understand the frustration, but my thought was: "Have you gone mad?" I do not want ratings that are convenient, whether that be convenient for investment banks or central banks. Indeed, ratings have been a bit too convenient for regulators to lean on too, driving out proper due diligence.
A public agency for non-sovereign assets has some attractions but how do we get over the implied guarantee? How do we get over public interference if bank capital is at risk?
We have some way to go in the search for capacity, independence and integrity, but of one thing I am sure and that is that corporate governance principles play a part, be it in the public or private sector, and that should apply to ESMA (European Securities Market Authority) and the other European Supervisory Agencies too.
ENDS
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