Credit rating agencies will have to be more transparent about how they assess a country’s sovereign debt under changes agreed by MEPs on Wednesday.
The changes will force agencies to indicate when they publish assessments, publishing ratings only after close of business and at least an hour before EU trading desks open.
Designated rapporteur and Italian centre-left MEP Leonardo Domenici told the European Parliament:
“We are making progress with this new regulation: having a ban on ratings which could influence policies carried out by governments, more transparency and accountability regarding the methodologies used for ratings.”
Credit ratings agencies are under fire because they attributed AAA ratings to US subprime mortgages that turned out to hold only junk status.
Critics also argue that they gave over-generous assessments to the banks that bought and sold those assets in the first place.
That’s why German MEP Wolf Klinz regrets that the new rules won’t change the agencies behaviour.
“They have for a long time after the global financial crisis maintained that they had nothing to do with it. Rather than considering themselves to be primarily a service provider they were only interested in growing their business as quickly as possible.”
Claims that the agencies made a fast buck at the expense of governments mean that for some, even the proposed overhaul doesn’t quite go far enough.