E.U. Official Vents Frustration Over Ratings Agencies
By JAMES KANTER
Published: May 5, 2010
BRUSSELS — The European Union’s financial services commissioner, Michel Barnier, vented his frustration with U.S.-based credit ratings agencies Wednesday as Moody’s Investors Service put Portugal on review for another possible downgrade that could make it more difficult for the country to service its debt.
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Mr. Barnier was briefing reporters ahead of his first official visit to the United States, where he was to meet the Federal Reserve chairman, Ben S. Bernanke, and Treasury Secretary Timothy F. Geithner. He will also meet with Wall Street titans like Lloyd C. Blankfein, the chief executive of Goldman Sachs, and Jamie Dimon, the chief executive of JPMorgan Chase.
Mr. Barnier complained that there were too few debt rating agencies, and he suggested that they were overly dominated by U.S. owners.
“There are not enough ratings agencies, not enough competition, and not enough diversity,” he said. “Why should there not be an agency that is more European than those that exist today?”
A decision by Standard & Poor’s, also based in the United States, to downgrade Greece’s debt to junk status last month enraged E.U. officials, who questioned whether the ratings agencies were accurately assessing how likely it was that countries in the euro zone would default on their sovereign debts.
Mr. Barnier said it was “an open question” whether such an alternative agency should be run by the private sector or by a public body.
During his trip, Mr. Barnier will quiz Mr. Blankfein on controversial financial transactions like credit default swaps as part of efforts to gather data before deciding whether or not to ban certain practices in Europe, E.U. officials said.
Another thorny issue for Mr. Barnier is regulation of hedge funds. In March, Mr. Geithner warned Mr. Barnier in a letter not to pass a law on hedge funds “that would discriminate against U.S. firms and deny them the access to the E.U. market that the currently have.”
Mr. Barnier said Wednesday he would use his visit to Washington to establish a closer working relationship with Mr. Geithner and to reassure him that he was doing everything he could to pass a law that would be nondiscriminatory. But Mr. Barnier said that he would explain to Mr. Geithner that the final decision on legislation would be up to E.U. governments and the European Parliament.
Mr. Barnier may also deliver that message to top players in the private equity industry, like Henry Kravis, a co-founder of Kohlberg Kravis & Roberts, at a dinner Sunday in New York.
On Monday in Brussels, a powerful committee in the European Parliament is expected to hold a preliminary vote on the proposed law on hedge funds, which could include rules that would raise the bar for access of foreign funds and fund managers to the E.U. market.
Originally Posted by GGT
Some of the "hysteria" seems connected to those damn ratings agencies. Looks a lot like when they suddenly downgraded MBSs, Lehman and Bear....massive sell-offs. Greek bonds can become junk over night, but they were junk long ago. Then it's like a vicious cycle of downgrades, selling, financing debt more expensive, deficit rises, rinse repeat. PIGS--what will happen?
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It's about time!
What a thuggish petty bureaucrat. The ratings agencies finally start to call bullshit on their finances and he starts complaining that those "private" "American" companies have too much power? 
