Members of Parliament's Economic Affairs Committee hit out on Tuesday at the role of credit rating agencies in evaluating a country's creditworthiness and once again called for action to be taken on credit default swaps, especially speculative trading in these instruments. They also criticised the Council for its slow reaction to the Greek crisis, with some arguing that the agreed deal provided little to be proud of.

Discussing the European Commission's plans for financial services legislation with Commissioner Michel Barnier, MEPs focussed their questions on the role of credit rating agencies and the option of regulating them further, the work being carried out in relation to banks and capital requirements, possible legislation in the field of derivatives trading and how best to plug the gaps in the dealing of credit default swaps.

Greece, the Council and credit default swaps

Just days after the details of a loan plan for Greece were agreed, some MEPs chose not to mince their words. "All throughout the Greek crisis, the Council's crisis management has been a disaster" said Udo Bullmann (S&D, DE). Sven Giegold (Greens/EFA, DE) said the crisis had escalated further due to the Council's slowness and confusion.

Anni Podimata (S&D, EL) asked Mr Barnier if the Commission was planning to investigate the role of credit default swaps (CDS) in Greece and what conclusions should be drawn. Mr Barnier avoided commenting on the Goldman Sachs case, because of legal proceedings in the US, but added that the Commission would be taking a close look at how to deal with CDS and naked short selling in October.

Earlier in the morning the MEPs held a discussion on the Greek crisis and many, including the chair, expressed strong regrets regarding the Council's reluctance to appear before the Economic and Monetary Affairs Committee to discuss the actions it had taken. Committee chair Sharon Bowles also insisted that it was essential for the EP to play an active part in the formulation of the new economic governance model.

Credit rating agencies

"Credit rating agencies must not be considered as gurus but as one of the actors in the field. They should not be considered as a panacea" Jean-Paul Gauzès (EPP, FR) said. "Is there any point at all in credit rating agencies evaluating countries?", asked Jurgen Klute (GUE/NGL, DE). Mr Barnier said he believed that it was time to go further down the road of regulating the work of these agencies. He added that the Commission would be working on the idea of a European credit rating agency.

Reforming the banking world

Questioning Mr Barnier on the next steps in banking regulation, Eniko Gyori (EPP, HU), asked how the Commission was working to harmonise its timetable on capital requirements with that of the G20. Vicky Ford (ECR, UK) expressed dismay at the low priority the Commission was giving to the problem of toxic assets. "We cannot wait five years after Lehman to tackle toxic assets, the very assets which caused the crisis" she said. Wolf Klinz (ALDE, DE) displayed some scepticism towards the Commissioner's comments on a European bailout fund for banks, arguing that such a fund would never be financed to the levels which would make it effective.

Over the next eight months the EP's Economic and Monetary Affairs Committee will be scrutinising a whole raft of Commission proposals aimed at better regulating the financial system. Most of the proposals will fall under the decision-making process where the Parliament shares equal power with the Council.