Deven Sharma, president of Standard & Poor’s, the company that downgraded the AAA credit rating of the U.S., will step down from his post on Sept. 12, and will be succeeded by Douglas Peterson, who is currently Citibank NA chief operating officer—Citibank is a unit of Citigroup.
According to a late Monday report from The New York Times, the move had been in the works for some time. Sharma had been considering stepping down, it was said, since the announcement last November by McGraw-Hill that it was splitting S&P into its two component businesses. The McGraw-Hill board signed off on Sharma’s resignation in a Monday meeting.
However, a Bloomberg News report framed his departure differently, pointing to the company’s downgrade of the U.S. credit rating and the resulting market uproar, as well as the $2 trillion error in its estimate of the country’s future national debt and the fact that neither Fitch nor Moody’s followed suit.
Noel Hebert, a credit strategist at Mitsubishi UFJ Securities USA Inc. in New York, was quoted in the report saying, “It looks like he’s being helped out the door. If it was a planned retirement, it should have been handled in a different way.”
According to Bloomberg, Peterson was approached in March as a potential successor to Sharma, who has been with the company just under five years, serving as president for four. The company faces a separation into four distinct business units under pressure from some shareholders, who have pointed out, according to The Times, that the units have little in common and their business needs often conflict. It also faces a Justice Department investigation over its rating of mortgage-backed securities prior to the financial crisis, and has been subjected to Congressional scrutiny over its business practices.
Joshua Rosner, an analyst at the New York-based research firm Graham Fisher & Co., was quoted saying, “Since Sharma came in, he has done little to enhance the credibility or reputation of the ratings agency. Given the recent downgrades, it appears their operational management and ratings modeling have not been meaningfully strengthened.”
Sharma will remain with the company till the end of the year to work on a strategic portfolio review.