Two veteran bankers, one from Merrill Lynch and another from U.S. Bancorp, will be the new CEOs of mortgage titans Fannie Mae and Freddie Mac, under a U.S. government takeover plan announced yesterday.
Two veteran bankers, one from Merrill Lynch and another from U.S. Bancorp, will be the new CEOs of mortgage titans Fannie Mae and Freddie Mac, under a U.S. government takeover plan announced yesterday.
Herb Allison, 65, a former president of Merrill who most recently led the TIAA-CREF pension fund, will take the corner office at Fannie Mae, the nation's largest housing finance group, as it and Freddie Mac are placed under federal conservatorship.
David Moffett, 56, a former U.S. Bancorp executive who last year joined the politically powerful Carlyle Group private equity firm, will be CEO of Freddie, the smaller of the two deeply troubled, government-sponsored enterprises.
Both men are "highly capable ... the circumstances are enormously challenging even for talented people," said Eugene Ludwig, founder of consultancy Promontory Financial.
"They've got enormous issues to deal with. They have capital problems to address. They have funding issues that are serious. 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 yesterday took control of Fannie Mae and Freddie Mac, with the housing market in its deepest swoon since the Great Depression and global financial markets in turmoil.
Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron were both ousted to make way for Allison and Moffett, who were both generally praised by financial industry groups.
"Their ethics are above reproach. When you think of Allison and Moffett, the first thing that comes to mind is ethics," said Steve Bartlett, president of the Financial Services Roundtable, a financial industry lobbying group.
Both men have ties to the Republican Party. In 1999 and 2000, Allison was national finance chairman for the presidential primary campaign of Arizona Senator John McCain, who is now running for U.S. president as the Republican candidate.
Moffett contributed to the unsuccessful 2004 Senate campaign of Republican beer baron Peter Coors, who is on U.S. Bancorp's board of directors, according to the Centre for Responsive Politics, a campaign finance watchdog group.
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