Examination of Witnesses (Questions 1100
TUESDAY 13 NOVEMBER 2007
Q1100 Jim Cousins: How many banks
have told you that they have approached the credit facilities
of the Bank of England?
Mr Hancock: I think, certainly
from S&P's point of view
Q1101 Jim Cousins: How many banks
have approached S&P's to tell you that they have approached
the credit facilities of the Bank of England?
Mr Hancock: I think that would
have to be something, if we even have the information, that would
have to remain confidential, given the sheer sensitivity and confidential
sensitive nature of banking.
Q1102 Jim Cousins: Do you take the
same view, Moody's?
Mr Madelain: We also take the
Q1103 Jim Cousins: You would say
the same thing to the French Finance Minister, would you?
Mr Madelain: I am not sure I understand
Q1104 Jim Cousins: Christine Lagarde,
do you tell her that it would be confidential if a bank told you
that they had approached the credit facilities of the Bank of
England? You would tell her that too?
Mr Madelain: We would, yes.
Q1105 Jim Cousins: A brave man. You
do see the point I am making. If such a simple and obvious point
as the one I am putting to you is lost in these mysteries so that
you neither know whether some bank has approached you to approach
the credit facilities of the Bank of England, nor would you tell
us if they had, means that, frankly, the public cannot have a
lot of confidence in anything you say or do, can they?
Mr Hancock: I think certainly
information that we are hearing on a confidential basis and retained
confidential within the rating agency, we incorporate into our
rating opinions, but we do not necessarily disclose that information
on behalf of the client.
Q1106 Jim Cousins: But if you want
a high level of transparency and you are very happy and you are
very welcoming of all the efforts that are going on in the United
States to increase that, why are you telling us that you neither
know, nor would you tell, if a bank approached the credit facilities
of the Bank of England when it is an obvious, important contribution
to the markets?
Mr Bell: We are bound by confidentiality
with our clients and of course follow the code of conduct.
Q1107 Jim Cousins: If you are bound
by confidentiality then all your ratings are suspect?
Mr Taylor: I do not agree with
that. One of the guiding principles of the IOSCO Code of Conduct
that was applied to us was how we treat confidential information
and how we keep that information to ourselves. So, in complying
with the IOSCO Code of Conduct, we would not be able to answer
the question on a specific-name basis. We answered it by saying
nobody has approached us, we have not had any information that
that happened, so we have answered your question, but if it was
confidential information we could not do it.
Q1108 Jim Cousins: In your case nobody
has told you that.
Mr Prescott: Yes.
Q1109 Jim Cousins: What is the case
with the other two?
Mr Madelain: I would make two
Q1110 Jim Cousins: We have actually
been told no-one has approached them. Has no-one approached Moody's?
Mr Madelain: I cannot make such
Q1111 Jim Cousins: So we do not know
whether anyone has approached you?
Mr Madelain: What I can tell you
is two things.
Q1112 Jim Cousins: Fitch are willing
to tell us that no-one has approached them; you are not willing
to tell us that no-one has approached the credit facilities of
the Bank of England?
Mr Madelain: It is not that I
am not willing. I am not informed in a way that I can tell you
Q1113 Jim Cousins: You would not
come to this Committee today and not know whether a bank had approached
the credit facilities of the Bank of England and they had told
Mr Madelain: I believe it will
be the responsibility of the Bank to communicate that.
Q1114 Jim Cousins: What is all this
stuff about transparency and "we welcome it" and "we
want more of it", when I ask you a very simple question and
total confusion and mystery comes?
Mr Hancock: I would repeat what
Fitch said, that we operate the IOSCO Code of Conduct, and that
is very specific on what we can say and cannot say in terms of
Q1115 Jim Cousins: If your code of
conduct prevents you from telling the market such a simple and
obvious issue about whether a bank has approached the Bank of
England credit facility (and I have not asked you who, I have
just said how many and you are not willing to say), then I do
not think your ratings are worth anything?
Mr Madelain: Our ratings will
reflect that information.
Q1116 Jim Cousins: If you had had
such information, it would be reflected in the ratings?
Mr Hancock: We reflect all relevant
information that we have in our ratings, even if we do not disclose
Q1117 Jim Cousins: But you are not
willing to tell the Committee whether a bank has approached you
to tell you that?
Mr Hancock: Correct.
Q1118 Jim Cousins: You are not willing
to tell the Committee whether you would expect a bank to approach
you and tell you?
Mr Hancock: I think, as I said
in the earlier question
Q1119 Jim Cousins: Would you expect
a bank to tell you that?
Mr Hancock: I would not be shocked
if they did not, given the nature