Fannie Mae Taps CFO: Former Hartford Finance Chief David Johnson

As its third finance chief in this volatile year, Johnson brings to the troubled mortgage finance company strong opinions and experience dealing wi...
Roy Harris and Stephen TaubNovember 26, 2008

Fannie Mae tapped outspoken financial-services-industry veteran David M. Johnson to serve as the embattled mortgage giant’s executive vice president and CFO, effective immediately.

Johnson — remarkably, the third CFO at Fannie Mae in this troubled year — will serve in a broadened role as chief financial officer, the company said. In August, Stephen Swad left the company, and was replaced by David C. Hisey, who had been Fannie’s senior vice president and controller.

Johnson most recently had been executive vice president and finance chief at Hartford Financial Services Group, a company he joined in 2001 and resigned from earlier this year. Prior to Hartford, he had been CFO at Cendant Corp., which he had helped take public earlier in his career, when he was an investment banker at Merrill Lynch.

How Startup CFO Grew Food Company 50% YoY

How Startup CFO Grew Food Company 50% YoY

This case study of JonnyPops’ success highlights the unusual financial and operational strategies that enabled rapid expansion into a crowded and highly competitive frozen treat market. 

Within months of joining Cendant in 1998, the company was engulfed in a massive financial scandal that reflected its previous merger with CUC International, a company that Johnson said in a February 2007 interview for CFO magazine and had “turned out to be run by criminals.”

Speaking of his time at Cendant in his 2007 interview, Johnson said, “When I joined in April 1998 I was in charge of investor relations, treasury, and tax. So I was focused on some of the things that are most important in a time of crisis — liquidity and communications. In some ways, those two things are linked. To maintain liquidity, you draw on reservoirs of goodwill and strong communications lines, strong relationships.”

Johnson also was serving as CFO at Hartford when the giant insurer became embroiled in a major scandal. In 2006, Hartford agreed to pay $20 million to settle charges that it made large, secret payment to brokers who sold its annuities to pension plans.

Last year, Connecticut Attorney General Richard Blumenthal announced the Hartford had agreed to pay $115 million to settle allegations by Connecticut, Illinois, and New York that it faked bids and allowed illegal trading in some mutual funds.

Johnson has also taken stands against what he considered to be extreme accounting conservativism, as opposed to an approach that allows companies to mark instruments to market. At one point, he called a position taken last year by the Center for Audit Quality, an offshoot of the American Institute of Certified Public Accountants, “basically a shoot-to-kill order for anyone who would exercise judgment.”

“With his broad and deep financial services and capital markets experience, David will help lead Fannie Mae as we assist the market during this unprecedented correction and weather the challenges facing all financial companies today,” said president and CEO Herbert M. Allison Jr.

Allison himself formerly had headed Merrill Lynch for many years, serving over Johnson, who was at Merrill for 12 years before moving to Cendant and later the Hartford.

Former CFO David Hisey will continue to serve as executive vice president and deputy chief financial officer, with responsibilities that include financial planning and analysis, business unit finance, accounting, financial controls, and the financial reporting and income tax functions. Hisey joined Fannie Mae in January 2005 as senior vice president and controller.