EC calls for credit agency regulation

The ratings agencies have come under intense criticism from a number of parties and governments concerning their rating of residential mortgage-backed securities and the role their collapse has had on the global credit crunch.

Speaking at the European Parliament’s plenary session, Charlie McCreevy, internal market commissioner for the European Union, said he would be discussing further with European nations, the US and the agencies about potential regulation of the sector.

He said: “What we need are clear, robust methodological rules and principles and a much deeper understanding by investors of the uses of ratings.”

McCreevy also repeated the claim that the rating agencies were too close to the lenders which they were rating and that they were too slow to react and downgrade credit ratings when things started to deflate.

His call to regulate was backed by a number of MEPs in the debate, but McCreevy insisted that a light-touch approach – should regulation be implemented – was the best way forward.

Mark Sismey-Durrant, chief executive at Heritable Bank, commented: “They should probably be regulated as they wield so much power. The market has been calling for something to be done after what has happened and regulation would introduce accountability. However, I don’t think it would make much difference.”

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