Freddie Mac CEO David Moffett To Resign

WASHINGTON — The top executive of Freddie Mac is quitting after less than six months on the job as the company continues to hemorrhage from mortgage losses and plans to ask the government for up to $35 billion in additional aid.

Freddie Mac said Monday that David Moffett will step down as chief executive and leave the company's board of directors by March 13. Moffett, 57, a former vice chairman of US Bancorp, has been CEO since September, when the government seized control of the mortgage finance company and its sibling Fannie Mae.

"It's never a positive sign when you see someone leave after six months," said Jim Vogel, a debt analyst with FTN Financial in Memphis, Tenn.

Freddie Mac said its board is working with the Federal Housing Finance Agency to appoint a successor to Moffett, who indicated in his resignation letter that he wanted to return to the financial services sector.

But finding a new executive to lead the troubled company, which has had four top executives in six years, could be a challenge for government regulators.

The Treasury Department will have to sign off on the new hire and the salary. And any CEO will have to take a lot of marching orders from regulators.

"You're basically being told what to do," said Guy Cecala, publisher of Inside Mortgage Finance, a trade publication in Bethesda, Md. "I'm not sure that there's any management being done."

Together, Fannie and Freddie own or guarantee almost 31 million home loans worth about $5.5 trillion. That's more than half of all U.S home mortgages.

Since the government takeover, "their mission has changed dramatically," said Bert Ely, an Alexandria, Va.-based banking industry consultant and a longtime critic of the two companies. "It's increasingly an arm of the federal government."

It's also unclear what the government ultimately plans to do with the two companies.

Before leaving office in January, former Treasury Secretary Henry Paulson said the best option would be for the mortgage giants to be run like public utilities _ privately owned but governed by a commission that would establish a targeted rate of profit. But Obama officials have yet to weigh in on how Fannie and Freddie should be structured in the future.

Monday's announcement comes just days after Fannie Mae said it needs $15.2 billion in government assistance and that it lost nearly $59 billion last year as the foreclosure crisis mushroomed.

Freddie Mac, based in McLean, Va., is expected to report its fourth quarter earnings early this month, and has already tapped almost $14 billion in government aid. The Treasury Department last month doubled its lifeline for Fannie Mae and Freddie Mac to $200 billion each.

Comments

[JoeBlough]

So how much is he getting as a golden parchute?

[Elephantinroom]

In 2003, Fannie Mae CEO Franklin Raines' compensation, for that year alone, was $20,000,000.00.
In 2004, Raines left Fannie Mae amid charges he had shifted "losses" so he and other senior execs
could take large bonuses.

[ccairnes]

Moffett has an interesting curriculum vita. Includes Carlyle Group, Bancorp and other banks and board of directors of ebay. He's one of them. Wonder what he'll be up to now.

[Grit]

Anyone that has watched HGTV shows about first time home buyers etc. over the past several years could see this coming. Two and three bedroom one bath 60 year old houses that need work for ONLY 450k. The young couple gets in with a variable rate almost no down morgage.

[Aristofaness]

“Together, Fannie and Freddie own or guarantee almost 31 million home loans worth about $5.5 trillion. That's more than half of all U.S home mortgages.”

If the houses are going to go back to their REAL PRIZE Before the boom), then these companies have NO HOPE of survive, simply because are compromised with 5.5 TRILLION and the houses secured are worth have of that. THIS IS AN HORRIBLE BLACK HOLE, my numbers indicate that this company ONLY TO BE AFLOAT REALLY NEEDS 2750 BILLION. (This is considering the houses only 50% of house lost value, from my point of view can be more) WE HAVE REASONS TO BE WORRIED.

[DallasMike]

Thank you BARNEY FRANK and CHRIS DODD.

[magibrotherhood]

these two are a joke-------they plainly were in on the scam or they are too stooooooopid to be on the congressional oversight boards---or maybe a little of both

[FORLOMC]

No I think we need to thank McCain, Sen. Graham, and the Bushies for all the deregulation over the past 30 years. Let's give the right people the credit for this meltdown.

[Elephantinroom]

The Clinton administration urged tougher Community Reinvestment Act (CRA) regulations in 1995, forcing banks to issue more and more risky loans. In 1999, NYT reported that Clinton's HUD announced its ambitious endeavor, that by 2001 Fannie/Freddie portfolio should be at least 50% low-moderate income borrowers.

2003-Sec. Snow testifies before (HFSE) to enact legislation to create a new Fed. agency
regulate min. capital requirements.
-HFSE ranking member, Barney Frank strongly disagrees, "These two entities- Fannie Mae and Freddie Mac are not facing any knid of financial crisis."

2004-Pres. Bush's FY05 BUdget suggests regulators at GSE's be replaced.
-Rep. Frank accuses Bush adm. of "creating an artificial issue'" at a speech to the Mort. Bankers Assoc. Cong. "I don't think we are in any danger here."

2005- Sec. Snow repeats call for GSE reform
-Harry Reid rejects GSE reform, "...we cannot pass leg. that could liimit Americans from owning homes and potentially harm our economy in the process."

2007-Pres. Bush calls on Congress for GSE reform, "Congress needs to get them reformed."
-Chris Dodd ignores Pres' warnings and calls on him to reconsider his "ill advised positon." NYT's Eric Dash's "Fannie Mae's Offer to Help Ease Credit Squeeze is Rejected, As Critic Complain of Opportunism" 8-11-07

-

[electricflag]

Too true, but you won;t get any sympathetic ears at this site.

[dadw5boys]

As long as it is onyl computer money they are getting don't sweat it !!!!!!!!!!!!!

[dadw5boys]

Fannie and Freddie should SUE THE INSURANCE COMPANYS THAT INSURED THE SUBPRIME LENDERS !!!!!!!!!!!!

OH; THATS RIGHT AIG -- the largest ---- IS BANKRUPT AFTER ALL THE EXECUTIVE BONUSES ~!

[MadAppraiser]

PERHAPS, attorney authored underwriting guidelines, and new appraisal rules/forms cannot supplant integrity, or due diligence in the real estate mortgage market.

[slowhand0728]

Another 35 Billion, People wake up they are just burning our money now. ENOUGH!

[dadw5boys]

YEAH SHUT DOWN BANKING AND DRIVE THE U.S. INTO A DEPRESSION !!!!!!!

[slowhand0728]

AIG is now into banking?

[FORLOMC]

Gee, have you every taken a class in Economics, or do you just listen to Rush, Ann and Joe the Plumber? You may want to do a bit of research before going nuts.

[paixa3]

I guess that David did not have the power or cajones to get rid of the criminal elements in the organizati­on......to­o bad.

[ProudMormon]

This is the first peep we've heard about Fannie or Freddie in months. Meanwhile, the media is going crazy over the behavior of private banks.

Every abuse, every gamble, every excess found in the private banks was going on in Fannie and Freddie. Mega bonuses, CDS gambling, subprime lending, hyperleveraging, etc. And this was all done with the implicit backing of US taxpayer dollars. Now it's no longer implicit, we own these turkeys.

Recent reports show that Obama is now using Fannie and Freddie like his own personal piggy bank. As they post record losses, and as they require another $200 billion in bailout cash, Obama is telling us that Fannie and Freddie are going to "pay for" $20 billion of his mortgage relief bill.

How's that? We give them $200 billion so they can give back $20 billion and say it's paid for? Outrageous.

http://money.cnn.com/2009/02/20/news/economy/foreclosure_funds/index.htm

Where is the media on this? AWOL, as usual.

[Twocents47]

How much re you getting out of the $12,000,000,000 spent every month in Iraq?

[ProudMormon]

I don't like Obama squandering money in Iraq and Afghanistan any more than I liked Bush doing it.

[naluca]

Very little would be saved by taking all troops out of Iraq and Afghanistan. Armed forces get paid wherever they are, and equipment gets upgraded on regular schedule. There would be some savings, but not much - and the short term cost of bring troops and equipment home will be enormous. This is a fundamental misunderstanding on the public's part, a misunderstanding which Obama and other politicians take advantage of.

[Dan Conner]

Where's that mantra of "hard work" executives use to justify their pay? This is but another indicator that executives are grossly overpaid and underworked.

[Dan Conner]

Don't tell me executives aren't overpaid. When the going gets tough, they get gone. It's easy to collect nine-figure salaries when everything comes up roses, but they run for the hills at the first thorn.

[Lillopa]

Bank greed greed corruption, over inflated housing market. Homes that were not really worth their value. Banks did not care sold to investors their morgages right? Banks got the money but what did they do with it. Bank credit cards should be frozen and interest rates lowered.

[Aristofaness]

I absolutely agree with you.

Really this comatose banks and institutions are not "To big to fail", the real intelligent argument is: "THEY ARE TOOOO BIG TO BE HELPED TO NOT FAIL" they are like immense and dangerous black holes eating everything they found, with absolutely no skeleton to support them. Let them go bankrupt, the sooner the better. LOWER THE INTEREST RATES TO CONSUMERS!!!!!

[AnAverageAmerican]

This is what happens when you give the same people money, they create the same problem. This is all just ridiculous.

Who's giving to those that have become unemployed due to bad management, bad decision making, greed and narcissism? Who gives the unemployed money to cover their losses?

These corporations are raping America. They seized control of our financial system and instead of the government pulling back funding they give them more money. It's RIDICULOUS!

This is our country, our home and these #$%king a$$h*les are determined to destroy it.

I want my money back!

[ProudMormon]

Don't forget, Fannie and Freddie are political entities, just like Amtrak. They aren't designed to make money, per se. They are designed to achieve a social goal.

Thus, any losses they incur in the pursuit of that social agenda are simply the cost of pursuing it.

For all the anger over the recent performance of these companies, I don't hear many people asking the most important question of all. Why is the government risking $5.5 trillion in taxpayer dollars to lower lending standards in the first place?

[Elephantinroom]

You're exactly right. In 1995, the Clinton administration forced tougher Community Reinvestment Act (CRA) regulations. This forced banks to issue more risky loans.
In 1999, the NYT reported that Clinton's HUD announced its ambitious endeavor, that by 2001 Fannie/Freddie portfolio should be at least 50% low-moderate income borrowers.