Regulatory Reliance On Credit Rating Agencies
Think-tanks such as the World Pensions Council (WPC) have argued that most European governments pushed dogmatically for the adoption of the Basel II recommendations, adopted in 2005, transposed in European Union law through the Capital Requirements Directive (CRD), effective since 2008. In essence, they forced European banks, and, more importantly, the European Central Bank itself e.g. when gauging the solvency of EU-based financial institutions, to rely more than ever on the standardized assessments of credit risk marketed by two private US agencies- Moody’s and S&P, thus using public policy and ultimately taxpayers’ money to strengthen an anti-competitive duopolistic industry. Ironically, European governments have abdicated a key component of their regulatory authority in favor of a non-European, highly deregulated, private cartel...
Read more about this topic: Financial Regulation
Famous quotes containing the words reliance, credit and/or agencies:
“And so the reliance on Property, including the reliance on governments which protect it, is the want of self-reliance.”
—Ralph Waldo Emerson (1803–1882)
“The world is a puzzling place today. All these banks sending us credit cards, with our names on them. Well, we didn’t order any credit cards! We don’t spend what we don’t have. So we just cut them in half and throw them out, just as soon as we open them in the mail. Imagine a bank sending credit cards to two ladies over a hundred years old! What are those folks thinking?”
—Sarah Louise Delany (b. 1889)
“While it is generally agreed that the visible expressions and agencies are necessary instruments, civilization seems to depend far more fundamentally upon the moral and intellectual qualities of human beings—upon the spirit that animates mankind.”
—Mary Ritter Beard (1876–1958)