Faymann wants European rating agency

The Austrian Social Democrats’ (SPÖ) appeal to install a European credit rating agency has found prominent support.

Siemens board member Brigitte Ederer said today (Weds) she had been in favour of the idea “for many years.” The former SPÖ state secretary told radio station Ö1 that the “dominance” of US American institutions “had consequences.”

Ederer added: “We should stand for European interests. These interests are not represented by the currently operating agencies.”

Moody’s, Standard & Poor’s (S&P) and Fitch are the world’s leading credit rating agencies. They are all based in the USA. The firms have been criticised for issuing more negative outlooks for some of Europe’s banks that followed European Union (EU) leaders’ appeals to help restore the state budget of ailing Eurozone member Greece.

Austrian National Bank (OeNB) Governor Ewald Nowotny said earlier this week it seemed that the three leading agencies acted “much stricter and more aggressively” about European concerns than regarding “similar cases in South America.”

SPÖ Chancellor Werner Faymann labelled the current situation as “uncontrollable” while Nowotny described it as “odd.” Nowotny also admitted no one could guarantee whether Greece could be saved with the hundreds of millions of Euros provided by the EU and the International Monetary Fund (IMF). However, the OeNB boss claimed this option was the “better way” than to relieve Greece of some of its debts. The former BAWAG PSK bank chairman claimed such a move would have resembled a state bankruptcy.

Faymann accused the big three of the rating agencies scene of “lacking empathy.” The former infrastructure minister – who also wants a Europe-wide tax on financial transactions – added today: “The financial market needs rules and the creation of a European credit rating agency has to be part of that.”

SPÖ State Secretary Andreas Schieder said a European agency of such a kind should be a “public and independent institution.” His idea was endorsed by Evelyn Regner who represents the Austrian Social Democrats in the European Parliament (EP) in Strasbourg, France, and Brussels, Belgium.

Jörg Leichtfried, who heads the SPÖ’s delegation in the EP, said it was a “disgrace” that some credit rating agencies “ruin” European countries. Leichtfried hit out at these institutions as some of them are owned by investment banks.

The SPÖ’s coalition partner, the People’s Party (ÖVP), also signalled support. ÖVP leader and Foreign Minister Michael Spindelegger said the main goal must be that Europe was not depending “on others who decide about our fate.”

ÖVP Finance Minister Maria Fekter said about the decision-making of the embattled rating agencies: “Everything is fine for them if the markets are stable – this is when they look at things through rose-coloured glasses.”

She added: “But if there’s a bit of a stiff breeze coming up, they tend to become apocalyptic and clearly too negative (in their reviews and ratings).”

The ex-interior minister claimed that such actions led to “wrong decisions” ahead and during the economic crisis. Fekter referred to the global economic downturn which kicked in following the collapse of once powerful investment bank Lehman Brothers in autumn 2008.

The ÖVP has not always found such approving words for left-wingers’ calls to create a European credit rating agency. Only recently, Harald Waiglein, a spokesman for the finance ministry told magazine profil: “Setting up a European rating agency would be like presenting a European cola drink before forcing every citizen to consume it.”

Several financial market experts have expressed concerns about the idea the SPÖ is now pressing on with. They have pointed out that stock market traders and shareholders may generally distrust the evaluations of a rating agency founded and funded by banks close to the EU over fears they review all developments affecting the continent’s economies in an overly positive way.