S&P Chief Ousted over Subprime Mortgage Mess
Publisher McGraw-Hill Cos is replacing the president of Standard & Poor's, the company's financial services division, effective immediately, amid questions about the role of credit-rating agencies in the subprime mortgage crisis.
Deven Sharma, who joined the company in 2002, replaces Kathleen Corbet, who is stepping down to pursue other opportunities, McGraw-Hill said in a statement on Thursday, without elaborating. Company spokesmen were not immediately available for further comment.
Sharma has served as executive vice president of investment services and global sales for Standard & Poor's since Nov. 1, 2006. He will report to Harold McGraw III, the chairman, president and chief executive of McGraw-Hill.
"The continual expansion of the world's capital markets presents enormous growth opportunities for Standard & Poor's, and Deven's strategic thinking and deep understanding of global financial markets will help us continue to identify and benefit from these opportunities," McGraw said.
Before joining McGraw-Hill , Sharma, 51, was a partner with management consulting company Booz Allen Hamilton for 14 years.
Earlier this month, U.S. Senate Banking Committee Chairman Christopher Dodd called for an examination of the credit rating agencies' role in valuing the subprime mortgage securities market.
The three largest U.S. raters are Moody's Corp; Standard & Poor's; and Fitch, a unit of France's Fimalac SA.
European Union market watchdogs are also to meet with credit rating agencies to discuss their role in the subprime mortgage crisis.
S&P and Moody's have cut ratings and previous forecasts on bad subprime loans and reassessed billions of dollars of debt, much of it related to subprime U.S. home loans.
Some critics have said ratings firms acted irresponsibly in previously giving good ratings to those loans.
Standard & Poor's, which employs 8,500 people, provides credit ratings, indexes, risk evaluation, investment research and data.
McGraw-Hill said in July it expected the financial service segment's growth rate, including Standard & Poor's, to be more than 10 percent in the second half of 2007, a slower pace than in the first six months of the year.
Shares of McGraw-Hill, which also owns BusinessWeek magazine and sells educational textbooks, have fallen about 26 percent in 2007. They closed at $50.27 on Thursday on the New York Stock Exchange.