THE BASIS POINT

Appraisal Wars

I swear that I did not start any appraisal controversies in the press last week when I brought up valuation problems, but there was a coincidental flurry in the press about the subject. Maybe it was the appearance that NAR keeps blaming “bad appraisals” for the lack of appreciation in the housing market. Regardless, the Wall Street Journal came out with one article, at which point the appraisal industry appears to have raised up its head and cried out “Don’t blame us, we’re just doing our jobs!”

Who is Deven Sharma? He is the latest person to quit his job. Ordinarily this wouldn’t be a big deal, but he was the president of Standard & Poor’s – the rating agency that stripped the United States of its AAA credit rating. People familiar with the matter (why am I never familiar with any matter?) who say Sharma’s move was in the works well before S&P downgraded its rating on the U.S., is purely due to organizational changes and does not have anything to do with the Justice Department investigating whether the agency improperly rated dozens of mortgage securities in the years leading up to the financial crisis in 2008. Citibank’s now ex-COO Douglas Peterson will replace him.