Credit rating agencies
Credit rating agencies rate the investment risks associated with various financial products or their issuers.
Currently three U.S.-based agencies corner the world credit ranking market: Fitch, Moody's and Standard & Poor's.
During the American mortgage crisis they played a crucial role by claiming that the complex high-risk products that actually caused the crisis were supposedly risk-free.
In addition, their sovereign debt ratings (ratings of Member States) proved to be inaccurate and badly timed, which also fuelled the crisis.
What was the Greens' position?
The Greens believe that the gradual regulation of credit rating agencies, which has been ongoing since 2009, is far from sufficient.
We insist that rating agencies should not be allowed to hold shares in companies they rate, since this represents a conflict of interest.
As another measure to combat conflicts of interest, companies having their debt rated should be restricted in their choice of agency by a rotation mechanism.
We also want to see the agencies' diverse letter-based systems replaced by a more intuitive number-based system. Our preferred alternative solution would be a European credit rating agency with the legal status of a foundation.
Did other MEPs accept the Greens' position?
The Greens succeeded in introducing most of our demands during the negotiations, but most of them were subsequently watered down, either by the EPP and the ALDE, or by the Member States in the Council.
Crossholdings in rated entities were limited, but not prohibited, and it was decided that a numerical system as suggested in our amendment should complement, rather than replace the letter-based system.
Which points did the Greens lose?
The Greens were unable to garner enough support to eliminate conflicts of interest. Our calls for a rotation mechanism were significantly diluted and limited to restructured financial products.
Our demands regarding career switches by leading analysts at credit rating agencies to posts as analysts in their previous employer's client companies were only indirectly met.
Furthermore, our call for an environmental risk analysis was removed from the legally binding text, having never been really supported by EPP and ALDE.
Procedure:Ordinary legislative procedure
Lead MEP:Leonardo Dominici (S&D)
Green MEP responsible:Sven Giegold
Staff contact:Michael Schmitt (Email)
Outcome of the vote
Below you find the results of the final vote in plenary. How did the political groups vote? What about national delegations? And what was the position of your MEP?