Value Added: Fannie Mae's Dan Mudd
In last week's blog/column Tom Heath wrote about one of the Washington region's smallest businesses, an indoor swimming center for dogs only. . .This week we jump tothe largest business in the region, Fannie Mae, the home mortgage giant, which probably has more revenues in a minute than the dog pool has all year.
I spent some time this spring with Fannie Mae chief executive Dan Mudd, and wrote up this short profile. The piece was written prior to Fannie Mae's most recent quarterly earnings report, which was not great news. The company lost $2.2 billion in three months.
Dan Mudd, 49, the son of CBS newscaster Roger Mudd, grew up in Washington and attended Sidwell Friends and later the University of Virginia, where he studied history.
Here's the rest of the profile:
Daniel Mudd craves the hot seat. He was a finalist for the U.S. Olympic Rowing team when the country boycotted the 1980 Moscow Games. He led a Marine platoon in Beirut following the barracks bombing in 1981. He was General Electric Corp.'s man in Mexico after the devaluation of the peso in 1993, in Asia after its currency crisis in 1996, and finished with GE amidst Japan's economic depression.
For the last three years, Mudd has commanded the corner office at Fannie Mae, steering one of the region's biggest companies first through the aftermath of a $6.3 billion* accounting scandal, and now through a nationwide housing crisis.
He lumbers into his spacious corner office in Fannie Mae's headquarters in northwest D.C., setting a bowl of potato chips on a coffee table and easing his six-foot-four-inch frame into a couch. He is relaxed and tieless, low-keyed, soft-spoken.
There's a camouflaged combat helmet from Beirut atop a bookcase. Rowing photos hang on the walls. The books range from military titles like "Fix Bayonets!," to Michael Beschloss's "Taking Charge." He favors biographies, and is currently reading one about banker J.P. Morgan, the bigger-than-life banker who saved the U.S. from impending financial catastrophe a century ago.
There are photos of his four children, his wife, other family and friends, Mount Fuji and Mount Kilimanjaro, both of which he has scaled. He scuba dives too. The only dissonant notes are Sen. Barack Obama's (D-Ill.) book, "The Audacity of Hope," which may be odd for a Republican businessman, and a small, black-and-white photo of former British Prime Minister Neville Chamberlain, who appeased the Nazis at Munich in 1939.
Why Chamberlain? he is asked.
"It's a reminder of the consequences of weakness," Mudd says.
Mudd was appointed interim chief executive on Dec. 21, 2004, following the resignation of Franklin Raines, and later was approved as permanent chief executive. He comes out of Marine and GE traditions where goals are set, orders are carried out and the task at hand comes first. He believes you make decisions based on business and the outside noise will take care of itself, even at a government-chartered Fannie Mae, which has long been the sandbox of Capitol Hill and the White House.
"It's impossible to make everybody happy," says Mudd. "So it's easy to do the right thing. We do have to manage more constituencies than the average private company. We have shareholders. We have stakeholders in the mortgage market. We have Congress, regulators, ratings agencies and exposure to the capital market."
But "if you start with the right business decision and you have thought it through and made the right decision for the right reasons, you can explain it to everybody."
So far, Mudd has shaken up the culture at Fannie Mae. He has cranked open the bureaucracy to let it breathe. He crafted a sort of constitution, called the corporate "promise," that detailed Fannie Mae's goals and compelled all executives to sign it and discuss it with management teams. He scheduled a series of listening tours with customers and regulators. He hosted let-your-hair-down breakfasts with employees and managers, and he offered cash rewards for employees who asked the toughest question. One winner: "Are we going to get our bonuses?"
"We needed clarity of expectations, openness and complete accountability," he said. "There was a massive amount of gunfire going on out there. Too many weird reasons were competing for doing things. So, helmets on again. Here we go. We can prove to people we are a good business with normal business standards."
He boosted the number of accountants and tried to improve relations with Fannie's regulators at the Office of Federal Housing Enterprise Oversight. Under previous regimes, OFHEO representatives were forced to wait in the lobby until a Fannie Mae escort took them to their destination. OFHEO now has badges and can roam the property at will.
Emerging problems, such as those in the U.S. economy, make Mudd's reading of the Morgan book timely. He sees parallels between the predicament he faces and the one Morgan mastered.
"It does inform a bit...because a lot of the crises that came up in 1897 and 1907 were crises of confidence that the U.S. would not back the dollar with gold," Mudd said. "The same thing happened then that is happening today. Liquidity shut down. And J.P. Morgan stepped in and not just with money, but personally, and instilled confidence back in the market."
*The post originally said $6.7 billion. The correct number is $6.3 billion.
Please email us to report offensive comments.
Posted by: editor on duty??? | May 14, 2008 12:04 AM
Posted by: Dan Beyers | May 14, 2008 7:50 AM
Posted by: Cooper | May 14, 2008 10:06 AM
Posted by: Anonymous | May 14, 2008 10:16 PM
The comments to this entry are closed.