mr president the recent attack by european leaders on credit rating agencies regarding the timing and degree of downgrades being meted out to countries <unk> debts may be seen by some as somewhat exaggerated
however the failures of credit rating agencies are now well known i think there is general agreement from all sides of parliament on this
they have given high ratings to bonds that subsequently defaulted
now that the tide has turned and the economic outlook across europe remains bleak they are guilty of overreacting in the opposite direction
not even an impressive and unprecedented eur seven hundred and fifty billion package seemed to convince them
having said that we have to be careful when reacting to this and not appearing to shoot the messenger just because he brings bad news
one thing is for sure whether they overrate or underrate a financial product the influence of the rating agencies on global financial markets is enormous
in effect they can and do hold a country and its people to ransom including workers and pensioners
this cannot but have political implications which need to be addressed
we need to understand how rating agencies create and sell their ratings
the arrangement between the security issuer and the agencies is an obvious problem
secondly there is the question of the number of agencies themselves and the degree of effective competition between them
if banks and financial institutions are to be regulated as they must be why should rating agencies be treated any differently especially given the oligopolistic structure of the rating agency market
the causes of the problem including the conflicts of interest are therefore clear
the solutions however appear less straightforward so let us keep level-headed and find the right solution being careful not to overreact with serious consequences
