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Banks To Be Told Not To Listen To Rating Agencies

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http://www.zerohedge.com/article/eu-prepares-law-end-influence-rating-agencies-tells-banks-police-themselves

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).

http://www.reuters.com/article/2011/07/11/europe-ratings-idUSLDE76A0FX20110711

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.

So the only banks able to do this are the ones too big to fail? Correct? So in order to assess risks banks must become too big to fail so they can get the staff to do risk assessments.

Great news for the ECB as all Greek debt will become AAA once the ECB's own risk assessment team rates it because Greece is complying "sort of" with it's austerity programme!

Yet more good news for the economic recovery.

So banks will be able to rate their own assets??? I mean what could possible go wrong with that!

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"you can ignore reality, but you cannot ignore the consequences of ignoring reality"

Or something like that.

The euro statists are the same as all other professional irrationalists. They believe themselves so powerful, so important that by merely changing the way they think or speak about things reality can be bent to their will.

When implicit violence begins to lose its power they will make it overt. Like always.

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"you can ignore reality, but you cannot ignore the consequences of ignoring reality"

Or something like that.

The euro statists are the same as all other professional irrationalists. They believe themselves so powerful, so important that by merely changing the way they think or speak about things reality can be bent to their will.

When implicit violence begins to lose its power they will make it overt. Like always.

These are the same rating agencies that were rubber stamping any kind of sh*t not so long ago for a fee.

Not only should they be ignored, they should be closed down.

Edited by John Steed

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These are the same rating agencies that were rubber stamping any kind of sh*t not so long ago for a fee.

Not only should they be ignored, they should be closed down.

I agree there is a certain irony, that now the rating agencies are saying the debt is crap, whereas for the past 10 years it's been all damn good 5h1t when the fees have been coming in.

The dynamics of the past decade haven't changed if you continually spend more than your income and some point you will be insolvent.

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I have to say its been a long time coming. Ratings agencies were always a geopolitical scam perpetrated mostly by America. If you don't believe me, ask yourself what happens (or what used to happen) when a foreign ratings agency (e.g. Japanese or Chinese) gave an opinion on a US bank?

The moment that sphere lost its monetary hegemony it was inevitable the ratings agencies would be cast aside.

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Surely they can't stop the ratings agencies saying that pigs swill is shit? They can't stop me telling everyone I know not to invest in european sovereign debt. Would they arrest me for saying thier debt is worthless?

If they insulate themselves anymore, their lining themselves up for mugabe style inflation, no one outside the eu will touch eu stuff , since it can't be trusted, since they have to say that cow muck is cordon bleau !

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Isn't it a core competence of a banker to be able to assess risk? Why do they need outside agencies to do this for them?

Why employ all these 'talented' people if they need a third party agency to tell them what to do?

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The Eurocrats are really running scared. The rating agencies are incompetent idiots, but still, on this occasion they are actually right.

The whole charade reminds me of the disagreements that would crop up when playing 'army' with my mates when I was a small lad:

Rating's Agency - "Bang, Bang, you're dead!"

Eurocrats - "No I'm not, you missed!"

Rating's Agency - "No, I didn't I shot you in the head!"

Eurocrats - "Liar! I'm not playing any more!"

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Isn't it a core competence of a banker to be able to assess risk? Why do they need outside agencies to do this for them?

Why employ all these 'talented' people if they need a third party agency to tell them what to do?

Because all the bankers have been replace with financial salesmen looking for their next commission?

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  • 276 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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