Can Ex-CFOs Save Freddie & Fannie?

Freddie's new Boss, Herbert Allison, once headed finance for Merrill Lynch before becoming CEO of TIAA-CREF. Fannie pins its hopes on David Moffiet...
Stephen TaubOctober 1, 2008

When Treasury Secretary Henry Paulson orchestrated the government’s historic takeover of Fannie Mae and Freddie Mac, he tapped two ex-CFOs to head up the struggling government-sponsored enterprises. Herbert Allison will be in charge of Fannie Mae, while David Moffett will be the top executive at Freddie Mac.

Earlier this year, Allison retired as chairman, president, and CEO of pension giant TIAA-CREF. Before that he worked at Merrill Lynch & Co. for 28 years, during which he served as CFO and then president and chief operating officer.

Moffett, credited as an expert in risk management and financial analysis, retired as the vice chairman and CFO of U.S. Bancorp in 2007, after having served the company in that capacity since 1993 (when it was known as Star Banc Corp.). He was responsible for all of the bank’s financial-management duties, including corporate accounting and reporting, tax credit investments, insurance, real estate, and purchasing.

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News of the government’s takeover of the two mortgage lenders sent the global stock markets soaring, but the response wasn’t universally favorable. Standard & Poor’s and Fitch Ratings cut the ratings on the preferred stock of Fannie and Freddie to junk status after dividends were eliminated, and debt research group Gimme Credit stated that it was “not convinced the Fannie/Freddie bailout will mark the final chapter of the credit crunch.” So the two former CFOs (neither of whom was available for comment) have their work cut out for them.