By Huw Jones
LUXEMBOURG (Reuters) - Credit rating agencies, under fire for being slow to warn investors about financial turmoil, face much tougher scrutiny and even new laws, a top market regulator said on Wednesday.
Critics say the agencies failed to warn investors in time about complex mortgage backed products as defaults in the U.S. home loans market snowballed into a global credit squeeze.
Eddy Wymeersch, chairman of the Committee of European Securities Regulators (CESR) said at the very least they will now have to introduce tougher codes of conduct.
"It is still not clear in the European Commission whether there will be laws on credit rating agencies. EU Internal Market Commissioner Charlie McCreevy has to decide. That is his decision," Wymeersch said.
"We are fed up with the rating agencies. Their performance was somewhat puzzling," Wymeersch told a Reuters Funds Summit in Luxembourg.
The sector is dominated by three players: Standard & Poor's, Fitch and Moody's and they have put forward proposals to improve how they handle ratings of structured products.
Wymeersch said some of the ideas being looked at included "naming and shaming" and reprimanding ratings agencies for any unacceptable behavior.
"One of the points on the agenda is do we need hard laws or soft ones?" Wymeersch said, adding there were lots of ideas being floated. Continued...
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