S&P, under fire, needs new bond ratings chief

NEW YORK, July 2 (Reuters) - Standard & Poor's is looking for a new leader for its much-criticized bond ratings business as current chief Vickie Tillman prepares to move to a new role at McGraw-Hill Cos (MHP.N), the agency's parent.

McGraw-Hill on Thursday said Tillman will assume a new position on Aug. 3 developing strategies for McGraw-Hill in such areas as construction research, education and energy.

Tillman, an S&P executive vice president, has run Standard & Poor's Ratings Services since 1999, and led its structured finance business from 1994 to 1999. She joined S&P in 1977 as a municipal analyst.

McGraw-Hill spokesman Steven Weiss said the New York-based company will meet with internal and external candidates to replace Tillman, who was not available for comment.

Lawmakers and investors have pilloried S&P and its rivals for being a principal cause of the global credit crisis and recession for awarding pristine ratings to low-quality mortgages and other securities that quickly proved worthless.

Tillman admitted in a letter published in the Wall Street Journal in January that "our assumptions regarding certain structured finance securities have not been borne out," and said S&P has changed its ratings criteria.

In its proposed reforms to financial regulation, the Obama administration has called on S&P, Moody's Corp's (MCO.N) Moody's Investors Service, Fimalac SA's (LBCP.PA) Fitch Ratings and others to boost the integrity of their ratings, especially in structured finance, and to reduce conflicts of interest.

Critics viewed these recommendations as kid-glove treatment that fails to address a key shortcoming: that large credit raters are paid by issuers whose securities they rate, creating an incentive to award high ratings to win more business.

S&P's change follows others in the ratings business. Deven Sharma replaced Kathleen Corbet as president of S&P in 2007, while Moody's replaced Chief Operating Officer Brian Clarkson, who drove its expansion in structured finance, in 2008. Both agencies have also replaced top structured-finance executives.

S&P credit market services, which includes the ratings business, accounted for about one-third of McGraw-Hill's first-quarter revenue. (Reporting by Jonathan Stempel; Editing by Steve Orlofsky)