Senator Jara is proposing that rating agencies be denied permission to operate if they don't meet certain standards.Ruling party senators are not just unhappy about bad credit ratings they appear to see them as a deliberate attack on financial stability, and today they took a stand.
Morena party Senator Salomón Jara announced a legislative amendment that would give the National Banking and Securities Commission (CNBV) the authority to revoke a rating agency’s authorization to operate.
The change would give the CNBV “the faculty and the obligation” to revoke an agency’s 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 . . . .”
Introduction of the legislation follows Monday’s downgrade by Standard & Poor’s of the credit outlook for Mexico, Pemex, the Federal Electricity Commission (CFE) and a long list of businesses and financial institutions.
Those downgrades and another by Fitch Ratings last month put the agencies in the bad books of President López Obrador, who accused them of saying nothing when Pemex and the CFE “were overrun by corruption.”
He claimed that S&P was punishing Mexico for “neoliberal policies” of the last 36 years.
Senator Jara said agencies such as S&P “have neither shame nor ethics” and accused them of trying “to apply pressure and engage in blackmail.”
He claimed they are not in favor of the government’s efforts to combat corruption, and would instead prefer to see the movement of funds from the public sector to private individuals and friends, or “crony economics.”
The legislative change will be presented to the Senate on Thursday, but the National Action Party head of the Senate Economic Commission declared the idea was “a pendejada,” which in this case would translate as “bloody stupid” or “bullshit.”
Gustavo Madero said the Morena party “hasn’t the remotest idea what they are saying” and warned that the initiative could destabilize markets.
Source: Crónica (sp), El Financiero (sp)
