BANGALORE – Just after few weeks, of the downgrading of American credit rating, news breaks out that S&P President Deven Sharma is stepping down this year end. Is it a direct consequence that Deven is facing for downgrading U.S. government? a question which lingers in everyone’s mind. Sharma, 55, is set to step down on September 12 and will be replaced by Douglas Peterson, 53, currently the Chief Operating Officer of Citibank, the banking unit of Citigroup.
President Barack Obama gave out a warning during his 2009 U.S. Congress joint session that “no one can mess with Joe” (the average American citizen) and that is exactly what Deven has done. Is he paying the price because he messed with Joe? A lot of questions have gone unanswered and speculations suggest that it is due to the unprecedented downgrade of the U.S. government debt.
The man from Jharkhand has been the dislikes of many including the world’s Wisest Investor, Warren Buffett. Paul Krugman, Nobel Laureate and officials have critically criticized Sharma’s analysis as well.
S&P downgraded U.S. debt from AAA to AA+ earlier this month and issued a report that criticized U.S. debt levels, said not enough was being done to cut costs and raise revenues and slammed the political infighting that accompanied the U.S.’s decision to raise its debt ceiling. The U.S. attacked S&P after the downgrade, with treasury officials accusing the firm of making a $2 trillion error in its calculations.
Sharma, 55, is set to step down on 12 September
The man from Jharkhand has been the dislikes of many including the world’s wisest investor, Warren Buffett. Paul Krugman and officials have critically criticized Sharma’s analysis.
S&P downgraded U.S. debt from AAA to AA+ earlier this month and issued a report that criticized U.S. debt levels, said not enough was being done to cut costs and raise revenues and slammed the political infighting that accompanied the US’s decision to raise its debt ceiling. The U.S. attacked S&P after the downgrade, with treasury officials accusing the firm of making a $2 trillion error in its calculations.
As quoted by Times of India, Paul Krugman, Noble Laureate said “Just to make it perfect, it turns out that S&P got the math wrong by $2 trillion, and after much discussion conceded the point – then went ahead with the downgrade. . . In short, S&P is just making stuff up – and after the mortgage debacle; they really don’t have that right.”
Commenting on S&P’s decision, U.S. treasury, Timothy Geither said “S&P’s decision showed stunning lack of knowledge about basic U.S. fiscal budget math, and they had reached absolutely the wrong conclusion.”
He proved to be the villain for the Americans but for his friends he still remains as a hero. Sudhir, Sahay, a close friend of Sharma says that his exit was definitely linked to the debt downgrade “His decision put the U.S. in a difficult situation. I think he was forced to go because of that,” said Sahay, a college mate of Sharma. “Deven is a man of conviction. He was always firm in his decisions. For us, he will always remain a hero,” said Sahay.
Back home, Deven Sharma’s father, RN Sharma, does not believe his son’s impending exit has anything to do with the downgrade.
The former chairman of Bharat Coking Coal told ET: “There is some other issue. He was looking for something else, something new. Deven worked with S&P for long, since 2007, and knew he would not continue with them any longer.”
Sharma joined S&P’s parent, McGraw-Hill in 2002 and for the past 9 years he has been involved in grading. When he took over S&P as the President, he was scrutinized by the U.S. government and media for the meltdown which occurred during the sub-prime crisis in the U.S. housing sector.
Currently S&P is facing scrutiny from the U.S. Justice Department. According to the New York Times, the firm is facing a Justice Department inquiry into its ratings of subprime mortgage securities.
