EU: Credit Rating Agencies

Lord Foulkes of Cumnock Excerpts

Monday 3rd October 2011 Lords Chamber

Asked By

[Lord Foulkes of Cumnock]

To ask Her Majesty’s Government what discussions they have had with other European Union Governments about the role of private credit rating agencies.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Government have discussed the role of private credit rating agencies with other European Union Governments in numerous meetings. These include the Financial Services Committee, the Economic and Financial Committee and ECOFIN, attended by Economics and Finance Ministers. The Government have also discussed this issue in depth with your Lordships’ EU Sub-Committee on Economic and Financial Affairs, and International Trade during its recent inquiry on sovereign ratings.

[Lord Foulkes of Cumnock]

My Lords, I am grateful to the Minister for a full reply, but does he recall that these credit rating agencies actually promoted the sub-prime mortgages which precipitated the crisis? They have been accused of a conflict of interest as they vary the ratings of both banks and countries, which exacerbates the crisis and can advantage the owners of these agencies? I asked in a previous Question whether the Minister would consider promoting an intergovernmental agency to take on this role. If he is not prepared to do that for ideological reasons, will he, with his EU colleagues, at least ask the competition authorities within the European Union to see what they can do to curb the excesses of this cartel and break up what has become an insidious oligopoly?