European Union Proposes New Sovereign Debt Rating Rules

ORWELL WOULD BE PROUD.

We don’t want your opinion unless we ask for it.

More of the same. The problem is the rating agencies, not the profligate spending of the politicians. 

Credit-ratings companies should be banned from rating sovereign debt unless they have been contracted to do so by the country concerned, a European Union lawmaker said in a draft report on proposed EU rules. Leonardo Domenici, who is responsible for steering rules on credit-rating companies through the European Parliament, called for the measure to be added to last year’s proposals from the European Commission. Domenici also said either “an independent public European credit rating agency” or “an existing independent Union institution shall be entrusted, with the task of assessing the creditworthiness of Member States’ sovereign debt.” Domenici’s report will be voted on by other members of the parliament. The assembly, together with EU ministers, must agree on the final wording of the proposed law before it can be implemented.

-From Bloomberg News, “EU Parliament Report Targets Curbs on Sovereign-Debt Ratings” by Jim Brunsden, Feb. 17, 2012

EU vs. Rating Agencies

More government legislating behavior.

Let’s give the EU the ability to temporarily “ban” ratings on sovereign debt if they don’t like the ratings.

Let’s open rating agencies to liability, where THEY have to defend against a standard of proof that there wasn’t “gross misconduct.”

Let’s have the EU add more rules to “increase competition.”

The logic appears impossible.

The EU farce continues.

EU Proposes Rating Agencies Can Be Sued – The Wall Street Journal, November 15, 2011