A vote due to take place today (7 June) on rating agencies was thrown back till 19 June amidst widespread rejection by MEPs of its contents.
Leonardo Domenici, an Italian socialist MEP who is drafting the Parliament's opinion on the issue, originally tabled amendments to the Commission’s proposal in order to push for the creation of a European credit rating agency.
His idea was firmly rejected by MEPs on the Parliament’s economic and monetary affairs committee, forcing Domenici to re-think, but his compromise proposals are now also set to be thrown out by MEPs.
Under the compromise, the EU institutions could carry out a “creditworthiness assessment” of countries, and would appoint a body to carry out this task within a certain time period.
Committee is against compromise
A source close to the committee told EurActiv: “There is a clear majority against the idea.”
Exclusively European approaches to credit assessment were also rejected at a debate on the launch of an international non-profit credit rating agency (INCRA) in Brussels this week (4 June).
Annette Heuser, executive director of the Bertelsmann Foundation North America, argued that the ‘big three’ rating agencies Moody’s, Standard and Poor’s and Fitch, needed competition.
“We believe an alternative proposal is particularly necessary for sovereign ratings," she said at a debate hosted by the European Policy Centre (EPC) think-tank in Brussels.
"As the highest asset class, they’re the elephant in the room. They affect everyone, but they’re rated in an un-transparent manner and the indicators can be improved,” she said.
Bertelsmann has backed the publication of a new report – Blueprint for INCRA – that was discussed at the EPC debate.
Government officials lied to former Moody’s boss
Asked whether the European Economic and Social Committee could play a role by providing alternative credit ratings, Heuser said: “A European agency wouldn’t solve the problem either. It has to be international. It’s naïve to expect investors to accept ratings done in Europe when the bulk of investment is made in Wall Street or emerging markets.”
Elsewhere a former Moody’s chief laid blame for faulty ratings at the doors of governments, rather than agencies.
Vincent Truglia, formerly managing director and head of the sovereign risk unit at Moody’s Investors Service, told the meeting: “You need to be careful about all data, wherever it comes from. Look at the Greek government. It was [misreporting data]. We discounted Greek government data for years. But Eurostat just reproduces what governments say.”
Truglia added: “I’ve been lied to by more government officials than you can possibly imagine.”