Fannie Mae weighs candidates for chief executive

March 22, 2005

Former New York Fed president considered, sources say


Inman News

Mortgage giant Fannie Mae is considering hiring former New York Federal Reserve President William McDonough as chief executive, people familiar with the company's plans told financial news publication Bloomberg.

Fannie is also considering William Shea, the former chief executive of insurer Conseco Inc., and Phil Gramm, a former Republican senator from Texas, about taking the top post, Bloomberg reported today.

In December 2004, Fannie Mae replaced Franklin Raines, its chairman and CEO, who announced he was taking early retirement, and Fannie Mae's chief financial officer, Timothy Howard, resigned Dec. 21.

The two left in the wake of the SEC directive to make accounting corrections that could knock out some $9 billion of Fannie Mae's past profit. Fannie Mae's financial accounting troubles have drawn shareholder lawsuits and investigations by the Justice Department and the Securities and Exchange Commission.

The government-sponsored enterprise has been searching for a chief executive since December. Daniel Mudd, Fannie's vice chairman and chief operating officer, has been acting as interim chief executive since Raines' departure.

House Financial Services Committee Chairman Michael G. Oxley (R-Ohio) has pledged to work toward a legislative reform package for Fannie Mae this Congress. Oxley has said that it is necessary to build a regulator for the GSE with the power, independence and funding to confront and handle such matters.

Copyright 2005 Inman News