On March 14th, 2008 the Financial Times spoke with Deven Sharma, President of S&P.  Deven Sharma made two comments about general perceptions of the role of rating agencies in the current mortgage debt crisis:

FT:  Looking back was there one mistake that the ratings agencies made?  Sharma: “When we look back on 2005 – 2007, the assumptions we had made have turned out to be different than what is the reality today.  So if the question is did your assumptions pan out?  No they did not, but the more important thing for us to look at is how we do the assumptions and how we make the assumptions available to the investors so that they can make better informed decisions. 

FT: Do you worry there is an inherent conflict of interest with the ratings agency model? Sharma: “There is certainly a perception of conflict.  We announced a set of 27 leadership actions in mid-February to bring more transparency.  First on our governance to ensure that there’s more independence; secondly transparency on our analytics; thirdly transparency around our information and fourthly around investor education so that they are making more informed decisions.  We realized we had all these policies, but had not made them transparent.”

Source: Financial Times March 14, 2008

BIIA Newsletter March 2008 Issue