López Obrador rejects senators’ initiative to control ratings agencies

President López Obrador and the Morena party’s leader in the Senate said today there will be no attempt by the government to control the operations of ratings agencies in Mexico.

“We are open to international scrutiny in our politics and our economy. Mexico is a free country and we do not have anything to hide; we are in favor of transparency. What the ratings agencies do is their job and we respect that — we are not going to limit their ability to function.”

Senator Ricardo Monreal also told reporters that the measure would not be presented and that fellow Morena Senator Salomón Jara, who argued in its favor yesterday, had accepted the decision.

However, Jara told reporters later that he was going ahead with it. “We have rights as senators to present our own initiatives, our proposals.”

The initiative would give the National Banking and Securities Commission (CNBV) authority to revoke ratings agencies’ permission to operate “when evaluations or qualifications do not adhere to the principles of independence, objectivity, rigor, authenticity, truth, integrity and transparency or attack in a deliberate manner the financial stability of the markets or a business . . . .”

It was triggered by Standard & Poor’s credit rating outlook downgrade on Monday for Pemex, the Federal Electricity Commission (CFE) and many businesses and financial institutions, and another downgrade of Mexico’s credit outlook last Friday.

The president suggested that the agencies take corruption into account as an important factor in the their ratings.

“I believe it would be a good idea for the ratings to include the corruption levels of governments around the world in their evaluations because it’s a variable that distorts everything. A country could have the best economic model comparatively, but if corruption is allowed to reign unchecked in a country, when everything is said and done the economy will not grow and it will trigger a financial crisis.”

He said he believed that his administration’s anti-corruption measures would generate large savings in the economy over the long term as well as restore confidence for investors, regardless of ratings agencies’ scores.

Source: El Financiero (sp), Publimetro (sp)