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.