REVEALED: Europe's Plan To Destroy The Ratings Agencies

explode explosion

Photo: Air Force

Shares of Moody’s fell over 3.5% thanks to an FT article on Europe’s plan to neuter the ratings agencies.This is the line that everyone is zeroing in on:

The credit ratings agency engaged should not be in place for more than three years or for more than a year if it rates more than 10 consecutive rated debt instruments of the issuer,” according to the draft.

Before being able to work for the same company or bank again, agencies would be compelled to sit out a four-year “cooling-off” period, a rule that would rob the big three credit rating agencies of some of their more stable revenues and business relationships.

Also in the report: Europe would have the ability to suspend ratings on countries in the middle of a crisis.

Read the whole thing >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.