German Chancellor Angela Merkel today criticised ratings agencies for a lack of transparency and a failure to correctly assess companies that turned out to be unstable.
She also called for greater transparency in financial markets and hedge funds in a speech during a visit to Japan.
"There is also little transparency at the ratings agencies that rate certain companies. If we look at how the mortgage crisis happened, we have often experienced that what was rated highly in the end turned out to be much more unstable," she said.
German banks have been the hardest hit in Europe by troubles in the recent risky US subprime mortgage sector.
German bank Sachsen was bought by a state-backed bank in a hasty rescue deal on Sunday after nearly collapsing due to its exposure to the subprime mortgage sector. Small-company lender IKB also needed an industry bail-out after its subprime-related investments crumbled.
Rating agencies Moody's Investors Service and Standard & Poor's have warned that banks may see double-digit falls in revenues and pretax profits due to credit and mortgage market troubles.