CEO leaving troubled mortgage giant Freddie Mac after 6 months
— -- The CEO of embattled mortgage titan Freddie Mac fre, who was installed last year to head the company after the federal government took it over, announced Monday that he is resigning.
David Moffett will leave his position by March 13. He had indicated that he wants to return to the financial services industry.
His announcement comes as a critical juncture, leaving the financially battered company — a crucial segment of the beleaguered housing market — with no foreseeable leader.
It also comes as Freddie Mac seeks billions of dollars more in federal financial help and is being hailed by the Obama administration as a vehicle for restoring confidence to the housing market.
Freddie officials said Monday that an interim successor will be named before Moffett departs.
"I don't know what to make of this," says Mark Zandi at Moody's Economy.com. "It's never a good thing for an institution to be without a leader, especially in a time of crisis."
Freddie's board of directors and the Federal Housing Financing Agency, which serves as the regulator for Freddie and Fannie Mae fnm, will appoint the interim leader. Moffett started Sept. 17. He previously served as chief financial officer of U.S. Bancorp from 1993 until 2007.
The announcement comes as Freddie gets billions in federal bailout funds. Already, it has tapped $13.8 billion in government funds, and informed regulators it may need up $30 billion to $35 billion more from Treasury to help ensure positive stockholder equity and maintain adequate capital. Freddie will report its financial results in March, and that is expected to show additional losses.
Freddie Mac has about 5,500 employees and has been thrust into the spotlight since last fall, when the federal government put the company into conservatorship. Moffett was appointed to replace Richard Syron as CEO.
John Koskinen, chairman of the board, said Monday in a statement that "we are very sorry to see David go. He made valuable contributions to Freddie Mac as the company transitioned into conservatorship."
Freddie's portfolios have been pounded by the record pace of foreclosures. Freddie and its sister, Fannie Mae, were put into conservatorship due to losses on bad mortgage debt and their exposure to subprime loans. The two guarantee or hold more than half of the nation's mortgages.
The federal government has agreed to provide the mortgage giants with funding in return for stock and ownership.
The announcement comes just after the Obama administration unveiled its housing rescue plan, which relies heavily on Freddie and Fannie to restore confidence to the marketplace. Homeowners who took out conforming loans owned or guaranteed by Fannie or Freddie will be able to refinance through those institutions — a plan designed to aid millions of homeowners who can't refinance because they owe more on their homes than they're worth.