EU to Investigate Credit Rating Agencies - by AOIFE White
The European Union will examine why credit rating agencies were slow to react to early signs of U.S. loan defaults that led to last week's market plunge, looking specifically at possible conflict of interests, EU officials said Thursday. Credit rating agencies such as Standard & Poor's Corp., Moody's Investors Service Inc. and Fitch Ratings are paid by the banks that they rate for credit-worthiness.
"Clearly there is the potential to give rise to conflict of interest. We need to look at how the code (of conduct) might be strengthened and if other measures might be appropriate," said a senior EU official who spoke on condition he not be quoted by name because of the sensitivity of the issue.
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