As the U.S. government seized control of Fannie Mae and Freddie Mac in what could be the world’s largest financial bail-out, Herbert M. Allison Jr. was named CEO of Fannie Mae and David Moffett CEO of Freddie Mac.
Allison and Moffett, according to The Wall Street Journal, are being handed the task of restoring the credibility and financial strength of the troubled mortgage groups and both have long careers in financial services, but have never led major organizations through periods of extensive turmoil. Nor have the two executives led mortgage companies — a gap, the WSJ suggests, perhaps but one that also helps distance them from the industry’s recent woes.
Allison, 65 years old, who becomes chief executive of Fannie Mae, spent most of his career at Merrill Lynch & Co. He later served five years as head of TIAA-CREF.Moffett, 56, who becomes chief executive of Freddie Mac, comes from banking, where he worked since 1993 as a top deputy to former U.S. Bancorp chief Jerry Grundhofer.
Moffett stepped down as U.S. Bancorp finance chief and vice chairman last year.
Without any current, direct ties to the mortgage business, Allison and Moffett can devote their time to figuring out “how can we get out of this hole,” rather than defending past mistakes, Robert S. “Steve” Miller, a corporate turnaround specialist told the WSJ.Allison declined to comment, except to say: “It is going to be a 24/7 thing for me from here on in.” Moffett has not commented.
Allison was named president of Merrill Lynch in 1998 and resigned a year later after overseeing extensive layoffs. Allison also cut TIAA-CREF’s workforce by eight percent. His cutbacks were nicknamed “Herbicides” after firing 500 employees.