EU eyes tougher regulation for credit rating agencies

Press quote (Deutsche Welle)
Philip Whyte
05 November 2010

"The financial crisis did expose a number of problems with ratings agencies, including major conflicts of interest," Philip Whyte, a senior research fellow at the Centre for European Reform, told Deutsche Welle. "The people that were paying credit rating agencies were the same people whose securities were being rated. There's also been a certain amount of disquiet about the power that ratings agencies have," he added. … According to Philip Whyte, that represents an aversion shared by some in continental Europe to the fact that the big three agencies are all from the Anglo-Saxon world and might have a certain prejudice toward continental European countries. "But markets might not give ratings coming from a European credit rating agency the same sort of credibility if it is just seen as a cosmetic exercise to cover up problems in countries like Greece and Spain," he said. … The financial sector sees the industry in a different way as well, according to Whyte. "The big lesson of the crisis is you can't be too reliant on credit rating agencies … Now banks and regulators see ratings from agencies as just one of the factors that come into an assessment of risk."