Feds To Fannie: Your Jobs Are Secure

Here's a memo posted on the Fannie Mae intranet Sunday. Staff writer David S. Hilzenrath transcribed it after it was read to him by a source.


MEMORANDUM

To: Fannie Mae Officers, Employees, and Other Personnel
From: James B. Lockhart III
FHFA Director
Fannie Mae Conservator

Subject: Conservatorship of Fannie Mae
Date: September 7, 2008

With the consent of Fannie Mae's Board of Directors, and under my authority as the Director of the Federal Housing Finance Agency (FHFA), I have appointed the FHFA as Conservator of Fannie Mae, effective immediately. This means that, for all practical purposes, the FHFA is now exercising all the authorities of the Board of Directors, executive management, and shareholders of the company.

As Conservator, I have appointed Herb Allison as the new Chief Executive Officer for Fannie Mae, also effective immediately. Mr. Allison will introduce himself to you very shortly, and provide additional details on what you can expect as the conservatorship moves forward.

The purpose of appointing the Conservator is to preserve and conserve Fannie Mae's assets and property, and put the company in a sound and solvent condition. The goals of the conservatorship are to help restore confidence in Fannie Mae, enhance its ability to fulfill its mission, and mitigate the systemic risk that has contributed directly to the instability in the current market.

Clearly, this is a very significant regulatory action, and I know many of you will be concerned about how it will affect you and your work at Fannie Mae. I hope the following information will allay those concerns.

First, your jobs are secure. There will be no change in your employment status with Fannie Mae as a result of the conservatorship. Your jobs, compensation, and benefits will continue without interruption.

And second, it is very important to us to do whatever we can to ensure that Fannie Mae's operations and activities also continue without interruption. To help Fannie Mae return to financial strength, the Conservator will delegate authorities to Fannie Mae's management to move forward with business operations. Your cooperation with Mr. Allison and the conservatorship team are critical to these efforts.

Some of you will be contacted directly by FHFA staff who will be at Fannie Mae to assist with the transition and answer any questions you may have. Rest assured that they are not there to do your jobs, but rather to facilitate the conservatorship, and ensure business is proceeding. Our
goal is the rapid remediation of financial and risk management weaknesses. Please let the FHFA staff know of any issues or concerns you may have, and please help them by providing any information they request. Of course, feel free also to direct questions through your existing reporting channels, and those individuals will forward your questions to their FHFA contact. We will get answers to you as quickly as possible.

FHFA shares with you the goal of returning Fannie Mae to a sound footing so that it may continue to provide stability and liquidity to the United States mortgage market. The strong expression of support made today by the Treasury Department testifies to the importance of that mission. We will need your help to succeed in returning Fannie Mae to financial strength.
Thank you in advance for assisting me as Conservator, and your new CEO, Herb Allison, in making this a reality.

By Dan Beyers  |  September 7, 2008; 8:30 PM ET
Previous: Dan Mudd Says Goodbye | Next: Early Briefing: The Fannie-Freddie Rescue

Comments

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Keeping their jobs secure? I can understand it for the secretaries and janitors and IT folks over there, but there are some people down in the trenches over there who screwed up big time and need to be held accountable. How many people from Andersen were hired back in '02 (when Andersen went down the tubes over Enron) that went over to Freddie or Fannie? Somebody needs to dig just a little deeper than firing the figureheads.

Posted by: FR_Herndon | September 7, 2008 11:40 PM

How come Freddie Mac employees didn't receive this email??? Is there a plan to layoff Freddie Mac employees? Does the federal government really want to add to the unemployed in this country? Doesn't that just add to the problem?

Posted by: Arling | September 7, 2008 11:41 PM

How is it that the government under the guilse of helping hte economy is bailing out this private sector corporation arbatraily. I dont own a home, didnt by a home at over inflated values yet as a taxpayer I have to assume the debt incurred by the bailout? Every investment is supossed to have risk. The companys in both the public and private sector who invest in this comapny should not be bailed out at tax payer expense.

Posted by: Brent | September 8, 2008 12:03 AM

sorry about my spelling..I was just so pissed that the joe public is getting stuck with the bill. Yet so many profited so heavily by unethical activity. what next a total clean up of all the credit reports that were adversly affected?

Posted by: Brent | September 8, 2008 12:06 AM

Crime of the century. Taxes rob from the poor and middle classes to give to the rich. Thats all they ever do. At minimum this is a taxpayer bailout of the banks. At maximum it is the banks stealing a great portion of the wealth from the people.

Posted by: RonP | September 8, 2008 12:15 AM

Brent, you may not have borrowed for an inflated value home, but at least borrow some commas: ,,,,,,,,,,,.

Posted by: Joe | September 8, 2008 12:17 AM

Who is the federal goverment going to bail out next?
Washington Mutual?
Why not just pay off the american tax payer with no more tax's!
Problem is this is just more wasted paper made in China.

Posted by: Mark Fossati | September 8, 2008 12:29 AM

if Hank Paulson can't find the fraudsters in the trenches at fannie mae maybe the general public can step up and expose the employees who should be given the boot.

In fact maybe the citizens should shine the light on all public payroll fraudsters.

Posted by: JohnAdams1 | September 8, 2008 4:49 AM

No jobs are secure under Mr. Allison. For your own well being please research Mr. Allison's history with Merrill Lynch and TIAA-CREF concerning downsizing and job cuts.

Posted by: Anonymous | September 8, 2008 7:22 AM

We've been had! The Russians returned us the favor 29 years later, Way to go CIA!

Posted by: Roman | September 8, 2008 7:47 AM

What we have here is a private co. who gave loans to people they shouldn't have, too much money for homes that were not worth it, and it's americans fault. I run a small business and am accountable to stockholders. If I did a lousy job, and made poor decisions, I'd get fired.

Posted by: Truth | September 8, 2008 9:40 AM

I hope that message to Fannie Mae officers and employees about their jobs being secure is not completely true, not that I want to see anyone lose their jobs, well not everyone anyway, but I would say those that had control over Fannie Maes Desktop Underwriter who tweaked the system to allow thousands upon thousands of bad loans to be made from 2004 through 2007 most definatly should get the boot out the door.

Posted by: o2cool1 | September 8, 2008 11:24 AM

At TIAA-CREF, Herb Allison fired a third of the staff, while hiring his friends into top positions at salaries a multiple of their fired predecessors. In the ranks, the higher paid good people were fired, replaced by lower paid neophytes. As a result performance and customer service collapsed. Bush attracts such incompetence.

Posted by: Nachman | September 8, 2008 1:44 PM

I am appalled that Mudd and Syron have been exonerated of any responsibility for what happened at their companies. If the CEOs aren't responsible, then who is? Not only do they get let off, but they leave with a big payoff. That money should be divided equally among the employees who have lost years of savings with their stocks.
New management says it will not cut staff. Do you want to place a bet? Everyone will get examined and let go, but the real culprits will stay at the top.

Posted by: concerned | September 8, 2008 1:56 PM

I am appalled that Mudd and Syron have been exonerated of any responsibility for what happened at their companies. If the CEOs aren't responsible, then who is? Not only do they get let off, but they leave with a big payoff. That money should be divided equally among the employees who have lost years of savings with their stocks.
New management says it will not cut staff. Do you want to place a bet? Everyone will get examined and let go, but the real culprits will stay at the top.

Posted by: concerned | September 8, 2008 1:59 PM

I hope that Mudd and Syron do not get one more red cent of compensation. Both made $14 million last year to run the co's into the ground.

Not one red cent more:

http://www.new.facebook.com/home.php#/group.php?gid=34269908141&ref=ts

Shaun

Posted by: Shaun | September 8, 2008 2:08 PM

Fair is fair. My family, my children, my children's children, and their offspring are all going to be saddled with the debt incurred because of this debacle. Since 10 trillion plus 50 Trillion is considered as not too big a deal for either the Clinton or the Bush administrations, I think each and every taxpaying household in America deserves an immediate forgiving of 20K of any debt we choose. We can just have it replaced with vaporous government funds. If Franklin Raines can get 20 million in severance for perpetuating this fraud, why can't we just get some "free money" too?
The only severance Raines and Gorelick should get is "you're lucky not to be in jail, don't let the door hit you in the ass on the way out"! Disgusting

Posted by: Kip Edgley | September 8, 2008 4:28 PM

communism doesn't work, but our gov't apparently hasn't learned that lesson. Putin's Russia has an income tax rate of 13%, ours is 40%. And I don't think I should have to pay the banks bad decisions. And alot of the money will go to the Chinese banks. We are getting screwed once again.

Posted by: dan | September 8, 2008 6:20 PM

Both Fannie and Freddie employees were their jobs were secure. They had to say that or there would have been mass panic. Simple damage control, that's all. There will be layoffs guaranteed.

Posted by: papa smurf | September 9, 2008 6:44 AM

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