NEWSMAKER-Veteran bankers to take reins at Fannie, Freddie
September 8th, 2008 | by admin |By Kevin Drawbaugh and Rachelle Younglai
WASHINGTON, Sept 7 (Reuters) - Two veteran bankers, onefrom Merrill Lynch and another from U.S. Bancorp (USB.N: Quote, Profile, Research, Stock Buzz), willbe the new CEOs of mortgage titans Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) andFreddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) under a government takeover plan announcedon Sunday.
Herb Allison, 65, a former president of Merrill who mostrecently led the TIAA-CREF pension fund, will take the corneroffice at Fannie Mae, the nation’s largest housing financegroup as it and Freddie Mac are placed under federalconservatorship.
David Moffett, 56, a former U.S. Bancorp executive who lastyear joined the politically powerful Carlyle Group privateequity firm, will be CEO of Freddie, the smaller of the twodeeply troubled, government-sponsored enterprises, or GSEs.
Both men are “highly capable … the circumstances areenormously challenging even for talented people,” said Eugene Ludwig, founder of consultancy Promontory Financial.
“They’ve got enormous issues to deal with. They havecapital problems to address. They have funding issues that areserious. They have personnel issues,” said Ludwig, who was U.S.comptroller of the currency in the Clinton administration.
In what may be the largest federal bailout ever, the U.S.government on Sunday took control of Fannie Mae and FreddieMac, with the housing market in its deepest swoon since theGreat Depression and global financial markets in turmoil.
Fannie Mae CEO Daniel Mudd and Freddie Mac CEO RichardSyron were both ousted to make way for Allison and Moffett, whowere both generally praised by financial industry groups.
“Their ethics are above reproach. When you think of Allisonand Moffett, the first thing that comes to mind is ethics,”said Steve Bartlett, president of the Financial ServicesRoundtable, a financial industry lobbying group.
