This is the Cato Daily Podcast for Monday, October 24, 2011.

I'm Caleb Brown.

European regulators are stepping up complaints about US-based rating agencies,

saying that they're biased against European

governments as many try to restructure their debts. Mark Calabria, director of

the Cato Institute's Financial Regulation Studies, says banning information isn't the best way to get back on South Financial European financial regulator and of course individual governments have

complained Greece is complained Spain is complained Italy's

complained even France is complained because they've been threatened with a downgrade

so individual governments have complained that you, they really don't like being subject to these American firms and that, you know, they should have their own firms that, you know, again, some of this is that, that these American firms don't understand

Europe to understand governments don't understand the sovereign debt markets

there at the end of the day most of this is about we want to either a shoot

the messenger or we want to be able to put sufficient

political pressure on the messenger to be able to get the answer we want

essentially what many of these countries and regulators do not want is the truth getting out about

how insolvent their governments are.

Because of course, Europe like the US, so much of our banking regulatory structure is tied

to ratings. For know, for instance, if something

gets downgraded, banks often have to hold higher capital. Now this is often exempted

for sovereign debt, but again, it raises questions about the solvency.

Many investors such as institutional pension funds

can only hold assets of certain ratings.

So there's certainly a possibility that these ratings get

...