Tags: moodys | rating

Moody’s: Governments Should Create Own Ratings Firm

Thursday, 22 Mar 2012 05:46 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Governments, which have been criticizing credit-rating companies over sovereign-debt downgrades, should start a competing firm, according to Moody’s Corp. Chief Executive Officer Ray McDaniel.

“Public institutions that have both the expertise and credibility among market participants should provide credit views on sovereigns,” McDaniel wrote Thursday in a paper called “A Solution for the Credit Rating Agency Debate” that was posted on the New York-based company’s website.

European lawmakers have blamed Moody’s, Standard & Poor’s and Fitch Ratings for complicating efforts to resolve the region’s debt crisis by cutting countries’ ratings, leading the European Union to adopt tougher regulations. While some have considered prohibiting the companies from publishing their opinions, that won’t stop investors from speculating on creditworthiness, McDaniel said.

“Rather than stifle those opinions, policy makers could neutralize private-sector credit rating opinions by introducing a public-sector voice to contribute competing views,” he said.

To be credible, the new firm would have to be independent from governments, have “analytical expertise” and disseminate its opinions broadly, McDaniel said.

‘Political Will’

“Given the number of public institutions that already exist that function along these lines, and that have a record for independence and credibility, establishing such a body is a matter of political will,” McDaniel said.

Governments also should stop using ratings in regulations, which adds to the perception that the companies are too powerful, said McDaniel, who’s led Moody’s since 2005. The paper follows a speech that he gave yesterday to the American European Community Association in Brussels, said Michael Adler, a spokesman for Moody’s.

The EU’s top markets regulator said today that Moody’s, S&P and Fitch must be more transparent. The companies registered with the European Securities and Markets Authority for the first time in October. The regulator said it hasn’t decided whether the “shortcomings” constitute a breach of EU law.

Last month, Leonardo Domenici, a member of the European Parliament, called for a ban on ratings of sovereign debt that haven’t been approved by the country involved. Michel Barnier, the EU’s financial services chief, said that creating a public EU credit-ratings company would be a “costly matter.”

© Copyright 2014 Bloomberg News. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web

Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
Privacy: We never share your email.
 

You May Also Like
Around the Web

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved