The European Parliament voted this week for new laws on credit rating agencies (CRAs) as a move towards creating greater transparency in the financial sector.
Glenis Willmott, Labour MEP for the East Midlands and Leader of Labour’s MEPs, said: “Credit ratings agencies are some of the guilty parties of the financial crisis. Many global banks were rated as “triple AAA”, yet were inherently unstable, and a number of “junk” financial instruments were rated as safe products.”
“This week in Strasbourg, we voted for new rules that will make credit rating agencies more responsible, more transparent and more democratic. Tory MEPs, however, refused to back these stricter rules.”
“For example, the new laws address the issue of conflict of interest. There is clear evidence that the business model of CRAs creates a conflict of interest by encouraging financial issuers to choose the agency they know will give them a good rating. But how can you fairly rate an institution that you are financially connected with? Clearly action has to be taken.”
“Yet Conservative MEPs failed to back such reforms that are the first step towards truly independent ratings agencies.”
The Tories claim to be addressing the problems which caused the financial crisis. The way they actually vote in Strasbourg tells the true story. For the Conservatives it’s a case of ‘business as usual.’”