McCreevy unveils tighter credit rules
Wednesday, 12 November 2008 13:12The European Commission has proposed a legally binding, centralised register of credit rating agencies in Europe as part of a tightening of regulation due to the financial crisis.
These agencies advise investors on how safe investments are, but they have come under fire because of a belief that they failed to spot some of the risks which led to the current crisis.
'Credit rating agencies will have to be authorised to operate in full conformity with EU rules,' EU Internal Market Commissioner Charlie McCreevy told reporters. He added that existing voluntary codes of conduct were insufficient, saying the agencies had led a 'charmed existence'.
Mr McCreevy said he wanted the EU proposals to form the basis of global regulation of agencies such as Moody's and Standard & Poor's, criticised by some as too slow to warn investors about risks in some of the products they graded.
The new rules are designed to ensure high quality credit ratings untainted by the conflicts of interest inherent to the ratings business, the European Commission said in a statement.
Among the proposals are an annual transparency report from the agencies and the appointment of at least three independent directors to their boards.
