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EU Attacks Credit Rating Agencies
Reuters - Europe issued a full-throated assault on credit ratings agencies on Wednesday, saying there were signs of bias against the European Union after Moody's downgraded Portugal's debt to "junk" status.
European Commission President Jose Manuel Barroso said Moody's decision to lower Portugal by two notches and maintain a negative outlook was fuelling speculation in financial markets. Europe was looking at getting away from its reliance on the mainly U.S.-based ratings companies, he added.
"Yesterday's decisions by one rating agency do not provide more clarity. They rather add another speculative element to the situation," Barroso told reporters, adding that the agencies were not immune to "mistakes and exaggerations."
"It seems strange that there is not a single rating agency coming from Europe. It shows there may be some bias in the markets when it comes to the evaluation of the specific issues of Europe," he said, stating publicly a view that many senior EU officials have pushed privately for some time.
It is not the first time during the sovereign debt crisis that the EU has taken the major agencies -- Moody's, Standard & Poor's and Fitch -- to task, but the message this time was delivered with a much greater sense of frustration.
Barroso's comments followed German Chancellor Angela Merkel's brushing aside on Tuesday of a warning from S&P, the largest agency, that it would view the current French plan for a partial rollover of maturing Greek debt as a default.
Such a move would narrow the options available to EU leaders to tackle the crisis and could greatly exacerbate the situation.
Merkel suggested the EU had depended for too long on the opinion of outside, private-sector agencies and said Europe had its own institutions that it needed to put its trust in.
"It is important that the troika (EU,
European Central Bank
) do not allow their ability to make judgments to be taken away," she said. "I trust above all the judgment of these three institutions."
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Posted on July 6, 2011 15:11 by
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