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EU Prepares Law To End Influence Of Rating Agencies, Tells Banks To Police Themselves
The schizophrenic EU once again confirms it has forgotten to take its daily dose of Geodon. Reuters reports that banks in the European Union face curbs on how much they can depend on ratings from credit agencies to calculate the size of their capital safety cushions. Michel Barnier, the EU's financial services chief, said he will make the proposals as part of his reform to bring EU bank capital requirements in line with a global accord known as Basel III that will increase the size of capital buffers. "To limit overreliance, we will be strengthening the requirement for banks to carry out their own analysis of risk and not rely on external ratings in an automatic and mechanical way... We will also make other concrete proposals before the end of the year to limit over-reliance to deal with insurance, asset management and investment fund sectors," Barnier also told the European Securities and Markets Authority (ESMA). Translation: banks will be told to .... police themselves. As for the basis of this move, it is all too clear: remove the influence of the ratings agencies on the fact that the European ponzi is unravelling faster than Lady Gaga's costume at next year's VMA. But wait, what about that AAA rating on the "CDO at the heart of the Eurozone." Oh, well, since that's an AAA, they are fine with that. Of course, if the CRA's say enough, and actually slap a rating that is truly appropriate with this reverse synthetic debt contraption, it's game over.
More:
The draft law is due to be published on July 20.
Peter De Proft, director general of the European Fund and Asset Management Association (EFAMA), told Reuters many investment firms already do their own credit analysis. "It will be more difficult for the smaller ones," De Proft said.
Moody's angered the EU this month by downgrading Portuguese debt despite the country securing an EU bailout.
Barnier said the "absolute minimum" must be to improve transparency in how agencies reach such decisions.
"That is why we should ask ourselves ... whether it is appropriate to allow sovereign ratings on countries which are subject to an internationally agreed programme," Barnier said.
Such a ban will be discussed by EU finance ministers shortly, he added.
Sharon Bowles, the UK Liberal chairman of the European Parliament's economic affairs committee, cautioned against seeing ratings agencies as the "fount of all evil" in the euro zone's debt crisis.
"I just think they are being shot as the bringer of bad news during the sovereign debt crisis. I am not entirely convinced the system is broken," Bowles told the ESMA meeting.
The continued zero-weighting of all sovereign debt when it comes to calculating bank capital has played a much more damaging role in the crisis by not allowing markets to discipline weaker debt, Bowles said.
Complete. Unmitigated. Idiotic. Lunacy. Luckily for Europe, China is still out there lifting the barrage of EUR offers with its excess trade surplus and trillions in FX reserves.
Alas, even that will soon run out.
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HAHAHAHAHAHAHA............The end is near!!!
I like your screen name; it's one of those engineering phrases that brings your reading of the textbook to slow crawl while you try figure out exactly wtf they're talking about. The name of the thing itself has always delighted me also, "rotating wing aircraft"/ yeah, great. The craziness is built in. I committed aviation many times and lived to tell about it but only in "real aircraft" that have those wonderful strong metal wings you can see out the window that hold my poor fragile white ass up.
Wonders aloud whether this will include Dagong.
The Emperor has banned mirror stores........
Things must be pretty bad.
it's just preemptive...
Just look at those euro coins! They look like gold coins!
We've got all sorts!
We've got the Greece eurocoins where rates are at 20%
Italian where rates are at 12%
and German once... they aren't worht that much because the rates are pretty low on those....
BUT THEY ARE VALID IN THE UNITED STATES OF EUROPE! or make that the "union"....
What's this - the idiots guide to starting a bank run?
LOL. That's clever. There's a book called "the tradgedy of the Euro"; that explains the genesis of the common currency and the mechanisms of it's European Central Bank, (some missing, and some non-functional); what we have already seen is that their very brave and strict rules that gave wealthy investors confidence in them have been thrown out and now they just react to crises, and "print to order"; and yes, it doesn't seem like a very confidence inspiring anouncement.
Who has the copy right on AAA?
The American Automobile Association?
American Avalanche Association?
A-1 Apocalypse Assayers?
American Alcoholics Association?
Asshat Association of America
There was a rumor once that "Moodys" had a big rubber stamp that said AAA on it and they just flipped through piles of proposals and bonds, and stamped everything within reach; the desk, the telephone, the back of their hand, etc. It would make a nice cartoon video, I think.
suggestion: just change the faces and it's deja vu all over again
http://www.time.com/time/covers/0,16641,19990215,00.html
EU needs to go easy on the ouzo.
Lawyer up bitches! We got contracts to rewrite.
Edit: Isn't this the criteria that many contracts use to help determine if a the collateral is no good anymore and the loan needs to be called in? I'm pissed if I am holding one of those contracts.
Yes, it has a "quasi-legal" status. your retirement fund, or whatever, may be prohibited from owning things that didn't get the AAA stamp. In the case of the Banks it's like the American "well, just mark the value to whatevah"/ with reference to the "capital reserves" that the bank holds. The ECB anounced a while ago that would buy Greek Bonds, "no-matter what they were rated"; basically admitting defeat in this attempt to do the impossible. The Euro was engineered by a couple of French Socialists in order to avoid the ongoing embarrassment of French Franc devaluations in the face of the relatively more stable Deutschmark; it worked fine for its intended purpose, printing as much money units as "necessary" for the various social services; the problem is that it's intended purpose was bullshit; and that is now coming home to roost.
Just... wow. This is so moronic that I'm having trouble finding the right bitingly sardonic quip to respond with.
Is today the 1st of April? Am I missing something?
We need more discussion of when it becomes impossible for US funds to hold European assets. No investment-grade rating = no investment, in many quarters of the market.
Someone sneak a question in to PIMCO on this. Or CALPERS. Or Vanguard.
Barnier may want to reconsider his statements, also. Shooting messengers publicly does little to shore up what little CONfidence remains.
*Even if some of the messengers (Fitch, Moody's) are wholly and entirely incompetent/criminal.
Gloves are coming off
this is a healthy sign - NOT! I'm not even sure you get a pop on in the market on this news before banks sell off. I hate the rating agencies, and think that the regulators have relied on them too much, but a knee jerk reaction like this smells of desperation.
More extend and pretend. Allows banks to turn junk into gold. Its the Midas touch!
payday bitchez....
http://www.reuters.com/article/2011/07/11/bankofireland-credit-idUSL6E7I...
Flash: My own rating agency has upgraded my performance
I just told a client dealing with a bank on a commercial workout to tell them that he is rejecting their version of reality regarding his fiscal soundness, and replacing it with his own.
I do hope this ploy works and/or buys him more time.
am I right, now your own central bank can print some more yummy money for you!!
HAHAHAHAHAA!
freaking priceless...hope you got gold or silver
Nope. Gold has been rated Junk by the EU.
GOOD IDEA! Should have let WaMu regulate themselves too!
Ooops. We did. That didn't work either....
Ha! WaMu had a AAA rating bougyt and paid for with share holder money . Other AAA frauds Fannie Freddie.
Desperate re-arranging of the deck chairs on the Titanic.
You may only price risk based on what we tell you to price that risk.
Of course gold has no counterparty, so holding on it as your reserves is not subject to this decree. Just a thought.
"the European ponzi is unravelling faster than Lady Gaga's costume at next year's VMA" ....lol
Remember when they changed the US Bank regs so that they marked their assets to model, instead of marking them to market? That was balls to the wall outrageous and no one did anything about it. This is just as outrageous, will anyone do anything about this? I bet not.
Accounting Gimmikz...
Yes, It seems to be kind of a trans-atlantic infection of the same disease. I would say, that some people did do something about it; they lowered their expectations for, and their confidence in, the banking/financial sector and changed their savings into Gold and Silver; and this process will probably be ongoing.
as I already posted, according to the EU constitution, sovereign default is FORBIDDEN. They just comply with legislation, I do not know what this fuzz is about.
Yes. Well, sovereign default is not necessary to wreck a Fiat monetary system. a.), and b.) changing the rules for your banks is not good for confidence, or public opinion. Well, not perhaps public opinion, but let's say the opinion of the wealthy. c.) these kinds of accomodation usually inflationary.
Shoot the messenger! Oops, just shot my foot instead, I'm bleeding...help ECB plz help me...what a world, what a world....
Glocks will do that
Instead of focusing on the problem, they marginalize those who merely point out the problem.
It's not like the ratings agencies are actually any good at that, even.
the emperor has no clothes!!
he still has clothes on, but they are cheap and ugly.
And made in Bangladesh or Sri Lanka (no offense whatsoever to Bangladeshans or Sri Lankans; just pointing out the irony of what would be - you know - sweat shop made clothing for the emperor and such).
Banks policing themselves...what can possibly go wrong with that?
Calling all Bozo's. This is beyond hilarious.
The US will follow suit shortly.
I barley get my idea out and they are already using it.... I want credit for the Schrodinger model!
http://www.zerohedge.com/article/dagong-puts-italy-ratings-downgrade-review#comment-1443095
your comments have been fwd'd to the nobel & pulitzer committees.
gotta love the EU finiserch, Barnier, calling for transparency @ the CRAs!
looks like its gettin to be the NWO v. the POW (pissed-off world)....
Bankruptcy is the best regulator.
+ 31.1035
Bankruptcy is a barbaric relic.
And yes, It can't be eaten too.
The EU likes the rating agencies only when they say what the EU wants? They should just withdraw their ratings on all EU debt. RW/NR Bitchez!
Fear not my klepto's Dick the best SRO money can buy is on his way to rule the day!
Could this actually be a good thing since people would likely do a lot more due diligence when deciding which bank to do business with instead of relying on ratings agencies?
No, it can't actually be a good thing. It doesn't matter what bank you do business with; part of the motivation for the ECB, and EU "systeme"; is central power and control. Bank failure is a thing of the past, what you're going to get instead, is currency failure. Sorry about that.
Yea, you are right. I don't know what I was thinking..
What's next? Try-until-you-pass stress tests?
Does the ECB really want to buy all those bonds itself? LOL, fucking pikers.
Perhaps the UK/US ratings agencies should rate our state and national debt with the same jaundiced eye that they rate the Eurozone. If integrity played any part in the current ratings then all our debt would not be rated AAA. Let's face it, our ratings agencies use the ratings whenever investors start running away from treasuries. Amazing how this latest thing with Italy surfaces right after a disastrous employment report. I posted the following yesterday:
by r101958
on Sun, 07/10/2011 - 11:12
"Let's imagine that there is a Benelux ratings house, a Franco ratings house and a German ratings house. All of them are of the same 'reputation' as S&P, Fitch, Moody's. Does anybody here actually think that they would not be rating Euro debt at AAA and downgrading each and every one of our states. Not to mention downgrading US national debt? Maybe then there would be a 'flight to safety' to the Euro or maybe even more to the Canadian dollar and the CHF. The fact that the big three rating houses are located in the UK and US should be seen by everyone as a huge red flag. The overall scheme here is that when investors start running away from US treasuries the UK/US owned ratings houses will pick another Euro state to downgrade thereby sending those investors running right back to US treasuries.
To clarify; I am not stating that the Euro states shouldn't be downgraded, they should be. However, so should US/UK debt as well as US state/municipal debt. That could happen if there were Euro owned rating houses (the EC has stated as much). The Chinese have started their own ratings house for this very reason. Instead we (the US/UK) have a ratings house monopoly and you'll note that our debt and that of the states is still rated very favorably."
Typical ponzi tactic.
Bankers the evil doers
http://lonerangersilver.wordpress.com/2011/05/09/pyramid-of-capital-syst...
Not the "fount of all evil" but an important part of the fraud and theft. The AAA rated EU CDOs is another example of fraudulent ratings for cash vs ratings to measure risk.
Moodys the bullet proof corporation of the "fascist of Omaha"
one day, some dictator will order the end of the democracy as well.
My Rating Agency, Your Rating Agency....
Do they think anyone is really going to lend to a bank based on their own analysis and rating......this is too funny. It spells the end of the European banking system.....pull all your money.....and sell now....nobody has been able to justify why your should invest in any financial orgaization let alone European banks.
They want the banks to police themselves then let them fail when they are in trouble and prosecute the criminals running them.
S&P and Moody's just rated ECB Junk status.
EU…Tells Banks to Police Themselves
Question: What would it look like if the financial cartel was in trouble on its way to pulling Europe together and melding it with the Fed on the way to world government?
Answer: It would look like this; the final chapter dictating a cloak of secrecy in frantic desperation as they struggle to survive, and fail…
I reject your view of reality and substitute my own for it!
Sheldon, Big Bang Theory
It's really bad when the best lines are coming from sitcom....annnnnd our financial institutions, politicial institutions, governing bodies, etc, etc.
...and the banks all promptly underreserve for anything, beat their earnings estimates, and pay themselves large bonuses...just before it crashes, and ask for another handout because their fraudulent holdings went south.
Glass-Steagall
Doesn't sound that bad to me; if they keep saying the same thing to the banks instead of bailing them out.
for once i think this is a good step.
Go to youtube and search for "david einhorn charlie rose"
You'll find an interesting interview with the hedge fund manager & his opinion on rating agencies.