The Regulation of Credit Rating Agency Across USA and EU : Different Systems, Same Concerns

Credit Rating Agencies (CRAs) have been a market entity relatively neglected by regulators and commenters, despite the increasing importance they have had in the 20th century financial markets development. Different legal system as United States of America and European Union have both recently issued an accurate regulation, that require the agencies the compliance with some organizational and reputational requirements in order to provide rating services. Moreover, almost in the same period Basel II Accord was issued, which attributed at a supernational level a crucial role to CRAs in assessing banks assets. In this article we firstly explain the most important features of the current American and EU regulations, then we examine also the relevant innovations of those new rules that have been proposed in both systems in response of the ongoing financial crisis. Finally we examine Basel II accord provisions concerning the recognition of rating agencies as External Credit Assessment Institution and the activities they are involved in under such accord provisions. The purpose of our analysis is firstly to provide a brief overview on the three main set of rules regarding credit rating agencies presently in force across financial markets, second to emphasize how all of them are equally able to raise the same issues concerning the access to credit rating market and some abusive practices involving the agencies themselves, third to evaluate whether the response that both American and European legislators intend to provide to financial crisis could someway also improve the identified CRAs weaknesses