Portugal Economists' Legal Action vs Ratings Agencies
LISBON: A group of Portuguese economists and academics have lodged a complaint demanding a criminal investigation into ratings agencies Moody's, Fitch, Standard & Poor's, alleging that they are breaking competition laws, says a report in the Portugal News newspaper.
Two economists from Coimbra University and two from the Higher Institute for Economics and Management allege that the three agencies control 90 percent of the market, essentially acting like a cartel or oligarchy. Economist José Reis questioned the independence of Standard & Poor's and Moody's, saying they share the same investment fund as their owners.
If an investigation proves that the agencies benefited from Portugal's credit downgrades, the economists want them to be held criminally liable, reports The Portugal News.
The European Union is conducting its own assessment of the rating agencies roles in destabilising sovereign finances amid a wave of bailouts handed out to countries teetering on the edge of bankruptcy. Greece has added its own voice to the chorus of disapproval against the rating agencies, saying they do not consider the EU's own internal evaluations in their decisions.
Cyprus has also had its credit downgraded by Moody's and Standard & Poor's. With speculation running rife that it could be the next in line for an EU bailout because of its considerable exposure to Greek national debt and banking, the island's financial sector is likely to be very interested in developments should the Portuguese Attorney-General decide to investigate the powerful international rating agencies.
This is a special report from Portugal made possible by the European Journalism Centre.