The president of Standard & Poor's, Deven Sharma, has "stepped down" and will be outta there by the end of the year. "Asked to leave" may seem closer to the truth, given S&P's track record from okaying those mortgage securities to the dissing the US of A's credit-worthiness.
Mr. Sharma will stay on as adviser to the next president, an insider*.
S & P is in trouble and has been for some time.
The ratings agency’s decision to downgrade the United States’ long-term credit rating to AA+ from AAA on Aug. 5 set off a storm of controversy, including criticism by President Obama and Treasury Secretary Timothy F. Geithner. The decision contributed heavily to the worst drop in American stocks since the financial crisis three years ago, as well as volatility that continues to whipsaw the markets weeks later. The other big ratings agencies, Moody’s and Fitch, maintained their top-tier rating on United States debt.
At the same time, the agency is being investigated over whether it improperly rated mortgage securities in the years leading up to the financial crisis. Standard & Poor’s, along with the other major ratings agencies, gave their highest ratings to bundles of troubled loans that appeared less risky during the housing boom, but have since collapsed in value.
Since the financial crisis, the agencies’ business practices and models have been scrutinized by Congress, and Standard & Poor’s is also being investigated by the Justice Department, people briefed on the matter have previously said. At issue is whether the agency’s independent analysis was driven by profits. The Justice Department inquiry, which began before the Standard & Poor’s downgrade of the United States’ debt, is centered on whether analysts’ decisions to assign securities a low credit rating on subprime mortgage loans were overruled by business managers.
Meanwhile, the activist investors pushing for change at McGraw-Hill have recommended that Standard & Poor’s ratings business appoint a “well-known independent oversight figure” to handle government relations.
The New York Times also reports that Sharma has been contemplating resignation for some time. Maybe that's true.
*NPR reports that he will be replaced by an executive from CitiGroup and the later report in the Times confirms that Douglas Peterson, a former COO at Citi, will step in to run S&P.
