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CEO who led Fannie after gov't takeover to quit
Tuesday - 1/10/2012, 6:31pm EST
AP Business Writer
WASHINGTON (AP) - The executive who was appointed to lead mortgage giant Fannie Mae in 2009 after the federal government seized the company plans to step down as its CEO.
Michael J. Williams announced Tuesday he will continue as CEO and as a director until a successor is found.
"I decided the time is right to turn over the reins to a new leader," he said in a statement. Williams, 53, has been a Fannie employee since 1991.
The government rescued Fannie Mae and Freddie Mac in September 2008 after the two mortgage firms absorbed huge losses on risky loans that threatened to topple them.
Since then, a government regulator has controlled the two firms' financial decisions. Pressure has been building for the government to eliminate or transform the two companies and reduce taxpayers' exposure to further losses.
So far, Fannie and Freddie have cost taxpayers more than $150 billion — the largest bailout of the financial crisis. They could end up costing up to $259 billion, according to their government regulator, the Federal Housing Finance Administration, or FHFA.
Williams oversaw the restructuring of Fannie's foreclosure-prevention efforts and managed the troubled firm's reorganization and transition to conservatorship.
Freddie's CEO, Charles E. "Ed" Haldeman Jr., announced in October that he would resign within the next year.
The departures amount to the biggest leadership shake-up for the agencies since their takeover.
Williams, Haldeman and other Fannie and Freddie executives faced intense questioning on Capitol Hill in November over tens of millions of bonuses and compensation they received since 2009. Twelve executives at the firms received roughly $35.4 million in total salary and bonuses in 2009 and 2010. Williams earned about $9.3 million for the two years.
Members of Congress are seeking to end those bonuses and align salaries with other federal employees who earn much less.
In December, the Securities and Exchange Commission brought civil fraud charges against six former executives at the two firms, including former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron. The executives were accused of understating the volume of high-risk subprime mortgages Fannie and Freddie held just before the housing bubble burst.
No current Fannie or Freddie employees were charged or implicated.
Williams' resignation might also intensify calls for the naming of a new director of FHFA. Edward DeMarco has served as the oversight agency's acting director since September 2009. But some lawmakers complain that DeMarco hasn't done enough to address rising foreclosures or to ease industry lending standards that critics call too restrictive.
The Obama administration nominated Joseph Smith, a North Carolina banking commissioner, to succeed DeMarco in November 2010. But Smith's confirmation was stalled by Senate Republicans, and he withdrew from consideration a year ago.
Washington-based Fannie and McLean, Va.-based Freddie buy loans from lenders, package them into bonds with a guarantee against default and sell those bonds to investors. Together, the companies own or guarantee about half of all U.S. home mortgages — about 31 million home loans — and nearly all new mortgages.
Fannie was created in 1938 in the aftermath of the Great Depression. It was privatized 30 years later to limit budget deficits during the Vietnam War.
In 1970, the government formed Freddie.
(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)