European Parliament opens debate on curbing rating agencies

BRUSSELS: Credit rating agencies came under fire in the European Parliament on Tuesday when a key lawmaker said he wanted to reopen discussion on controversial proposals to curb their ability to comment on bailed-out euro zone countries.

Italian socialist Leonardo Domenici, tasked with hammering out amendments to a draft law being debated by the Parliament, said the body should reexamine the suggestion again after the European Commission had backed away from it.

A proposal for a rating blackout on countries in a bail-out programme was left out of the draft law by the European Commission, which proposes legislation in the European Union.

Domenici’s comments come amid growing political criticism of rating agencies, particularly following Standard & Poor’s recent warning that it may downgrade 15 euro zone states, including Germany and France, as credit conditions tighten.

Members of the Parliament were debating how they may change the draft rules to control rating agencies. Some raised the prospect of resurrecting elements of an idea to ban the ratings of countries, such as Greece, which are in bail-out programmes.

“The possibility of giving ESMA (the European Securities and Markets Authority) the chance of suspending financial evaluations of countries during a period when they are going through recovery plans has been removed,” said talian socialist Leonardo Domenici.

“I think we should talk about this not necessarily because we want to just copy it, paste it back as part of our counter proposal.”