New rules creating European oversight for credit rating agencies have been approved in the European Parliament. The aim is to boost confidence in financial markets. The legally binding registration system and supervisory regime in the EU would set out to improve the way agencies rate debt. The agencies are seen as having led banks astray with poor advice on repackaged debt, leading to costly intervention. Monitored by supervisors from the countries they operate in, the agencies could face EU sanctions if found guilty of professional misconduct.
The member in charge of steering a report on banking secrecy through the parliament talks about this related concern: “The European Parliament’s proposal — the text already voted on in the Economic and Monetary Affairs Committee, and which I hope will be voted on this Friday — is to end this system which keeps everything opaque, when what we want is transparency. It is legitimate when the European taxpayer is asked to come to the banking sector’s rescue that the sector make efforts to help countries fight against tax evasion.” Parts of this report are facing resistance from the assembly’s conservatives.