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STEVE CHIOTAKIS: Moody’s and Standard & Poor’s are famous for sitting in judgment on the credit worthiness of others. Now, the rating agencies face their own sort of downgrade. There are plans in Europe to cut the agencies’ influence.
From London, Marketplace’s Stephen Beard reports.
STEPHEN BEARD: The plans are driven by European resentment over the debt crisis. Many European politicians and officials feel that the problems in Greece, Ireland, Portugal and Spain were aggravated unfairly by the rating agencies.
Under the plans unveiled today the agencies would be much more tightly regulated. They’d be required to give a country early warning before a downgrade. That would give the country a chance to challenge the new rating before it becomes public.
Under another proposal it would be easier to sue agencies if their ratings are judged to be wrong. But Simon Tilford of the European Centre for Reform says the new rules would not change the ratings on many countries:
SIMON TILFORD: There are some very very substantive concerns over growth prospects in a number of economies. And while that remains the case the ratings agencies will only be doing their jobs if they draw attention to this.
Nevertheless many concerns remain about the rating agency’;s broader role in the financial crisis. Next week in South Korea the G20 summit will also consider its own crackdown on the agencies.
In London this is Stephen Beard for Marketplace.
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