Early Briefing: Assembling A New Mortgage Team
Staff writer Zachary Goldfarb takes a look at the changes underway inside mortgage finance giants Fannie Mae and Freddie Mac today, and reports on the haste in which the government installed new leadership:
Retired and on his first family vacation in years, Herbert M. Allison Jr. sat with his wife and adult sons eating lunch on a veranda in the Virgin Islands when an urgent caller rang with a confidential inquiry.
It was Treasury Secretary Henry M. Paulson Jr. The government was preparing to seize struggling mortgage finance giants Fannie Mae and Freddie Mac. Would Allison, a former chairman of TIAA-CREF, consider leading one of them? "He outlined the seriousness of the situation, and over the phone I told him I'd do whatever he wanted," Allison said.
The next day, Friday, Sept. 5, Allison boarded a water-taxi to the airport, got on a plane, landed in Washington, and with a rucksack and his tropical attire, arrived on the steps of the Treasury Department. He was quickly chosen to be Fannie Mae's new chief executive. The announcement of the takeover would come on Sunday and he would start Monday.
In the month since the government seized the companies, Allison has joined new Freddie Mac chief executive David Moffett, a former U.S. Bancorp chief financial officer, and James B. Lockhart III, the regulator who hired both men and oversees their operations, in forging the team charged with an ambitious mission: Stabilizing the nation's ailing mortgage market and lowering borrowing costs for everyday Americans.
In other news:
* Staff writer Kendra Marr details the high -stakes race for an improved anthrax vaccine between two companies with capital letters in the middle of their names: PharmAthene of Annapolis and Rockville's Emergent BioSolutions.
* Staff writer Michael Rosenwald catches up with Murry Gunty, the founder of a Bethesda private equity firm called Blackstreet Capital Management.
Executives of Blackstreet Capital Management, a Bethesda private-equity firm, are constantly tossing around pithy investment philosophies. One saying is, "If we can't fix it in 12 to 24 months, we probably can't fix it."
Another is, "Management, management, management." And then there is this one: "If we don't lose money for investors, all the other outcomes are good."
That last investing notion has faced quite a test recently, as the relatively small, fly-under-the-radar firm found itself entangled in a public relations nightmare after two infant deaths in August were linked to bassinets sold by Simplicity, which was bought by a Blackstreet affiliate in a complicated deal earlier this year.
Blackstreet's predicament has turned the spotlight on its founder, Murry Gunty, and his business of buying extremely troubled companies near collapse.
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