Mortgage-finance company Fannie Mae
(FNM.N) on Wednesday announced a management shake-up in an
effort to come to grips with mounting credit losses and a
shrinking capital base.
The company's chief financial officer, Stephen Swad, was
replaced, and the chief business officer, Peter Niculescu, will
take on an expanded role. A new chief risk officer was also
named.
Daniel Mudd, the company's chief executive, will remain in
place and has the confidence of the board of directors, said
board chairman Stephen Ashley.
"The board of directors is firmly committed to Dan Mudd,"
Ashley said in a statement. "The board will continue to work
closely with Dan and his management team to guide the company
and support the housing finance system through a very
challenging period."
Fannie Mae and Freddie Mac (FRE.N), its sibling agency,
have so far this year booked billions of dollars in losses as
the national housing market has been hit by a wave of loan
defaults and falling home prices.
The companies have also seen more than 90 percent of their
market capitalization evaporate since January and last month
the U.S. Treasury promised to re-finance Fannie Mae and Freddie
Mac if either were facing collapse.
In a statement on Wednesday, Mudd said management changes
would help the company better provide support for a U.S.
housing market in the worst downturn since the Great
Depression.
"This team will be responsible for meeting the dual
objectives of conserving capital and controlling credit losses
while Fannie Mae continues to provide crucial liquidity to the
U.S. housing and mortgage markets," Mudd said.
Trading in shares of Fannie Mae was briefly suspended for
the announcement and prices fell 2.0 percent in extended trade
after the news.
"This was probably a necessary step but not one that's
going to determine the future of Fannie Mae. Clearly, the fate
of Fannie and Freddie is in the hands of policymakers," said
Eric Kuby, chief investment officer, North Start Investment
Management Corp, Chicago.
Wall Street has been on edge for several weeks on talk that
the U.S. Treasury would put the companies through a wrenching
restructuring or even nationalize them.
The management shakeup means a greatly expanded role for
Niculescu who will run three divisions: single-family mortgage
guaranty, capital markets, and housing and community
development. He joined Fannie Mae in March 1999 after leaving
investment bank Goldman Sachs where he was the managing
director and co-head of Fixed-Income Research and Strategy.
Steve Swad, the departing CFO, joined the company only a
year ago and the chief risk officer, Enrico Dallavecchia, has
also stepped down.
(Additional reporting by Steven C. Johnson in New York;
Editing by Leslie Adler)
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