EU attacked for plan to gag rating agencies

By Sean Farrell
Sunday 23 October 2011 04:23

European politicians have cast doubt on a proposal that would protect bailed-out countries from debt downgrades by credit-rating agencies.

Michel Barnier, the European Union's commissioner in charge of financial services, on Monday called for rating agencies to be barred from ranking countries that have been rescued in internationally agreed deals.

Moody's enraged the EU this month by downgrading Portugal's debt after the country had secured an EU bailout.

But Syed Kamall, Conservative MEP for London and a member of the European Parliament's Economic Affairs Committee, said: "I have no objection in principle to governments being able to check the data used by the agencies.

"However, governments should not use this as an excuse to delay any downgrades of their sovereign ratings. Unfortunately, governments whose ratings are downgraded are often too ready to shoot the messenger rather than tackle their debt problems."

Sharon Bowles, the Lib Dem chairwoman of the European Parliament's Economic Affairs Committee said: "They [the rating agencies] are being shot as the bringer of bad news during the sovereign debt crisis. I am not entirely convinced that the system is broken."

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