Freddie's CEO Shuffle And New Details On Pay
Sunday night we shared with you memos from the outgoing and incoming chief executives at Fannie Mae. Today, staff writer Zachary A. Goldfarb has collected memos from the top executives at Freddie Mac. First up is former CEO Richard Syron's goodbye to Freddie employees. Then you can read incoming David Moffett's welcome.
It's interesting to note of how each reference Treasury Secretary Henry Paulson's remarks over the weekend.
Meanwhile, a federal official sought to clarify the government's stance on employee pay. As we reported Sunday, salary and benefits will remain the same but the bonus structure is being reevaluated. A federal official told Goldfarb that management will review performance measures to reflect Fannie and Freddie's new status under conservatorship.
As you have probably heard, the Treasury Department announced today that it has placed Freddie Mac and Fannie Mae under the conservatorship of our regulator, the Federal Housing Finance Agency.
Under conservatorship, FHFA will assume direct control of both companies. FHFA has appointed David Moffett, former Vice Chairman and CFO of U.S. Bancorp, to succeed me as CEO. He will be joined by an equally strong non-executive Chairman, John Koskinen. I will retire and have offered to assist in the transition.
With the turmoil in the housing and mortgage markets over the past year, the role Freddie Mac and Fannie Mae play in providing affordable mortgages to homeowners and reliable liquidity to lenders is more important than ever. The conservatorship process is designed to ensure that the GSEs continue to fulfill that critical role, despite the significant increase in credit losses and erosion in capital we have experienced.
Under the conservatorship process, Treasury will backstop the GSEs, providing additional capital if future credit losses cause our capital base to be depleted. This will ensure that we can continue to operate and fulfill our housing mission.
Treasury Secretary Paulson today said, "I attribute the need for today's action primarily to the inherent conflict and flawed business model embedded in the GSE structure, and to the ongoing housing correction. GSE managements and their Boards are responsible for neither."
We have been through a lot together. Earlier this year we completed a multi-year accounting restatement, a massive and complex project. More recently, we have had to manage significant increases in delinquencies, foreclosures and loan modifications as a result of the sharp decline in house prices. I am deeply grateful for your commitment and hard work through all of this, and proud of what we have accomplished together amid the worst housing market in our lifetimes.
I accepted the CEO position at Freddie Mac at the end of 2003 because I believed in the company's housing mission. Given the current turmoil in the housing market, I believe that mission is even more important today.
As the conservatorship process plays out, I ask you to stay focused on performing your job responsibilities and give your full support to Mr. Moffett so that Freddie Mac can continue to fulfill its housing mission. The vast majority of our employees will see no changes in their day-to-day activities as a result of the conservatorship process.
It has been a pleasure and an honor to work with all of you.
Good evening, I am David Moffett - the new CEO of Freddie Mac. I'll be communicating with you a lot in the coming days and weeks, so there's no need to go into great detail here. For now, I just want to say a few key things and provide a link to an e-mail from former CEO and Chairman Dick Syron, whose contributions to this company over the past four years are deeply appreciated.
I appreciate the long hours that Freddie Mac's employees have been putting in to strengthen the company and serve the GSE mission in this difficult environment. I can only imagine the pressure you have been under, and the frustrations you must have felt in recent weeks. This has been a difficult and draining period for all of you. I want to thank you for your extraordinary service during an extraordinary time.
I'm going to work very hard as CEO to provide the leadership Freddie Mac needs. I sincerely believe the company has a great opportunity to improve and strengthen itself during this period with the government's support. And I look forward to making the decisions that will help this company move forward. I would not have taken this job if I was not deeply supportive of the company's mission and its essential role in helping our nation through the toughest housing market in decades.
On Tuesday, we will conduct an All-Employee Town Hall that I would like you to attend. In the meantime, please stay focused and continue to conduct the company's business in the ordinary course.
Treasury Secretary Paulson said in today's announcement, "Fannie Mae and Freddie Mac are critical to turning the corner on housing." I couldn't agree more. The expertise and commitment of Freddie Mac's employees is a major asset to the company - as well as the country - and I look forward to meeting you in the coming days.
September 8, 2008; 5:11 PM ET
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