EU looks at US 'model' to oversee rating agencies[fr][de] 

The EU regulatory vacuum enjoyed by rating agencies including Fitch and Moody’s will be filled before the end of the year. Charlie McCreevy, the EU's Internal Market commissioner yesterday (31 July) outlined regulatory alternatives he is putting under public debate until September with a view to proposing a new set of rules later on in the Autumn.

The final go-ahead for a clamp-down was given by EU Finance Ministers in July (EurActiv 08/07/08) and it is now clear that rating agencies will be required to ask for prior authorisations in order to operate in Europe. The Commission also appears convinced that registration should be EU-wide in order to avoid imposing administrative procedures in every European country where the agencies operate.

What is still under debate though is who will carry out this task. Last month, Commissioner McCreevy seemed to have made up his mind about proposing a stronger coordination role for the CESR, the Committee of European Securities Regulators. But the consultation started yesterday outlines the creation of a brand-new EU agency as a viable alternative to a beefed up CESR.

At stake is the traditional dilemma between a more centralised EU-wide approach and looser intergovernmental cooperation. In any case, it appears clear that, while the authorisation procedure will be dealt with at European level, supervision and endorsement will be left to national authorities.

McCreevy is also asking  the relevant actors in the sector how they believe the EU's reliance on ratings can be decreased. "I am convinced that excessive reliance on ratings in EU legislation might have discouraged banks and other financial institutions from exercising their own due diligence," he said. "They should not be encouraged by law to rely solely on ratings for their risk assessment processes," McCreevy stated on 31 July while launching the public consultation. Financial institutions are therefore likely to be asked to carry out their own risk assessments.

Brussels is pointing out that the foreseen new regulatory measures "do not intend to interfere with rating methodologies or rating decisions which will remain the sole competence and responsibility of credit rating agencies," states a press release issued by the Commission.

Rules currently applied in other countries will also be taken into consideration when the Commission tables its proposals in the Autumn. Commission experts explained that the US system will be used as "model" for different aspects, despite the shortfalls it showed during the credit crunch. But they said they were confident the model can be used for inspiration, underlining that the subprime crisis actually broke out before the new rules were in place.