Local view for "http://purl.org/linkedpolitics/eu/plenary/2010-06-15-Speech-2-449"
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"en.20100615.28.2-449"2
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"Mr President, ladies and gentlemen, first of all, I should like to thank most sincerely the political groups that are responsible for this series of questions on an extremely important matter. I am grateful to Mr Chountis, Mr Pittella, Mr Gauzès, Mrs Goulard – who spoke just now – and other Members who are due to take the floor.
However, ESMA still needs to be set up, and I fully agree with what was said a moment ago by Mrs Goulard and which you all believe: as we discussed recently with the rapporteurs for the supervision package, for the de Larosière package, a dynamic, credible compromise must be reached between Parliament and the Council in order to implement what has been proposed, which is the creation of these three independent authorities on 1 January. We are not there yet.
We must make an effort, and here I call once again on this House, on the Council and Parliament, to come closer to agreement. I repeat, Mr President, the Commission’s willingness, and my willingness in particular, to help bring about this dynamic compromise.
Moreover, in order to increase the benefits of transparency and to boost competition among credit rating agencies, a provision has been introduced to facilitate access to information on the structured financial products of any credit rating agencies interested in publishing an unsolicited credit rating.
In other words, when an agency receives information enabling it to work out its credit rating on structured products, the other agencies will have the right to use that information to work out their own rating.
This is the stage we are at. It is not enough. It is becoming ever more widely accepted, in Europe and throughout the world, that the current failings in credit rating procedures, which have been brought to light by the crisis, have not been sufficiently addressed, and I wish to voice my agreement with Mr Chountis on this matter.
That is why I have asked my services to undertake a new assessment of the entire architecture and role of credit rating agencies. It is within this framework, Mr Pittella, that, in the coming months, we will carry out what you called an inquiry, but in any case an objective, very precise analysis and examination of the operating methods of these agencies in the light of and in accordance with the new legislation, even though it is not yet fully implemented; we will have to wait until early December for that.
I, like all of you, ladies and gentlemen, believe that there is a problem, and it is quite simply to do with the diversity of this market. This market is too concentrated; it is in too few hands. There is not enough competition in this sector, and that worries us. Without singling out one particular option for the moment, Mr Pittella, the Commission is looking at structural measures, including the creation of an independent European credit rating agency, which for some of us – I am speaking for myself here – is a welcome thing, particularly when it comes to sovereign risk ratings, which were mentioned just now by Mr Gauzès, as well as by Mrs Goulard and Mr Pittella.
Another structural measure that we are considering is the increased participation of independent public bodies in the credit rating process. Particular attention must be paid to sovereign debt – since that is what we are referring to when we talk about Greece and possibly about other States too – in order to ensure that the methods employed are indeed the right ones and that they are appropriate.
The lack of due diligence on the part of the banks and the other financial establishments, and the lack of alternative criteria for assessing the reliability of an investment also merit special attention. The current financial regulations, which expressly provide for the use of credit ratings, also need to be thoroughly re-examined.
Those are all the issues, and we will not sidestep any of the difficult matters on which the Commission is working. We will be able to present our initial guidelines in September and, at the same time, we will address other important matters relating to transparency and monitoring in the context of the regulation of derivative products and short selling.
I should like you to hear my honest opinion and to fully appreciate my determination on this matter, as on others that concern the lessons learnt from the crisis and the transparency to which citizens and businesses are entitled. I also had the opportunity, on 20 April, to speak to you about this issue of credit rating agencies and their importance for the functioning of the economy and of the financial markets.
In addition, we will table some legislative proposals at the end of this year or at the very start of 2011, not only to continue – I am echoing what you said, Mrs Goulard – what was begun by my predecessor with your support, which is being implemented but which is not enough, but also to achieve a greater degree of transparency so as to prevent conflicts of interest and to ensure that these ratings are greater in number, more diverse and, when it comes to sovereign risk, above reproach.
When it comes to checking whether a product, a business, and, if necessary, a State – I refer here to sovereign risk, and I shall come back to this subject – is in good health or has a fever, you will agree with me, Mrs Goulard, ladies and gentlemen, that breaking the thermometer does not cure the fever. The question is whether the thermometer works properly and, if necessary, whether we can use several thermometers to perform the validations and checks.
I feel that there is plenty to say about the functioning of the thermometer and, hence, about the functioning of credit rating agencies, which play a major role in assessing the risks associated with the situation of businesses and States alike. The crisis has shown, and continues to show, Mr Chountis – you are right – that they have not always functioned in an exemplary manner, with very serious consequences at times.
This is an area, ladies and gentlemen, in which the G20 has taken strong decisions – as it has on other matters – and the decisions in this case have involved the introduction of supervision and rules of governance. I would remind you that, at the time of the crisis – many of you have mentioned this, including Mr Gauzès and Mrs Goulard – the Commission quickly assumed its responsibilities, and it has made the regulation of the activities of credit rating agencies a priority over the last two years.
In September 2009 – in other words, one year after the collapse of Lehman Brothers – the regulation on credit rating agencies was adopted with the very strong support, help and improvements of Parliament – and I am grateful once again to Mr Gauzès – in order to address the problems that the operating methods of these agencies were causing and which contributed, in a way, to the financial crisis.
The regulation introduced a system of mandatory registration for all agencies established in the Union and imposed a set of stringent requirements to ensure, as far as possible, that there are no more potential conflicts of interest, to improve the quality of ratings and the methodology used, and, finally, to ensure that agencies operate in a more transparent way.
Ladies and gentlemen, I am confident that these new rules will noticeably improve the independence and integrity of the rating process, will make these rating activities more transparent, and will improve the quality of ratings themselves, including ratings of the sovereign debt of the countries of the European Union and of the financial institutions of the Union.
Two weeks ago, on 2 June – this is the second stage – the Commission, at my instigation, adopted a proposed amendment to the regulation on credit rating agencies in order to entrust the future European Securities and Markets Authority (ESMA) with sole responsibility for the ongoing registration and supervision of credit rating agencies."@en1
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