Olli Rehn, the EU Economic and Monetary Affairs Commissioner, said last summer that he wanted to create a European credit rating agency. “In his view, it is a problem that all three major rating agencies are based in the US,” reported Dow Jones. It is true that Standard & Poor’s, Moody’s and Fitch have all been unhelpful from the European Commission’s point of view. But one agency is not as American as all that. Fitch is “dual headquartered” in New York and London, after a merger with London-based IBCA in 1997, and is owned by Fimalac, which has its headquarters in Paris. And who was the founder and first managing director of Sovereign Risk Ratings at IBCA (which I think stood for International Bank Credit Analysis)? It was Chris Huhne, the Liberal Democrat Cabinet minister. Formerly the business editor of The Independent on Sunday, Huhne was at IBCA from 1994 until its merger with Fitch, when he became MD of Fitch IBCA. And when Huhne was one of those evil ratings agency bosses,* what was his claim to fame? It was that he put American government debt on negative watch (I think for the first time) because of the Federal government shutdown in November 1995 engineered by the Speaker of the House of Representatives, Newt Gingrich. Huhne’s view was that a credit rating should take account of not just a government’s capacityfor repaying its debts but the likelihood of its so doing. The shutdown, caused by Congress’s refusal to agree Bill Clinton’s budget, raised the possibility that political deadlock might result in non-payment. *The eurozone leaders’ attempt to blame ratings agencies for the problems of their currency reminds me of Eoin Clarke’s listing of YouGov, the polling company, as one of the “enemies of Ed Miliband” (since changed to “critics of Ed Miliband”). Photograph: Will WintercrossEnemy of the euro?
Sunday, 1 January 2012
I didn’t have time to comment on this curiosity before Christmas. After Standard & Poor’s put most eurozone countries on credit watch and Moody’s said it would review all EU states next year, Guido Westerwelle, the German foreign minister, said on his trip to London on 18 December: “It’s high time we found an independent European rating agency.”
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