(The authors are Reuters Breakingviews columnists. The opinions
expressed are their own.)
By Daniel Indiviglio and Agnes T. Crane
WASHINGTON/NEW YORK, June 6 (Reuters Breakingviews) - No
good deed goes unpunished. Fannie Mae FNMA.OB has chosen
Timothy Mayopoulos, its general counsel, as its new chief
executive. His promotion won’t improve already tense relations
with Bank of America (BAC.N) – the mega-bank fired him in 2008
after he questioned mounting losses. But his integrity and
background make him a decent fit for the job.
As the top lawyer at BofA during the crisis, he counseled
executives they didn’t need to disclose Merrill’s
mortgage-related losses if they didn’t creep too high. But as
Greg Farrell points out in his book “Crash of the Titans,” new
estimates just days after shareholders had approved taking over
the Thundering Herd “had busted through the outer limit of what
Mayopoulos had been using as his guideline.” A day after trying
to raise it with BofA’s finance chief, he was fired.
Running the mortgage zombie could make for some awkward
conversations with his old firm. While Fannie’s general counsel,
Mayopoulos recused himself from dealing with a long-running spat
over who should take the hit on faulty mortgages BofA had sold
to the agency. But as chief he may now have to deal directly
with Brian Moynihan, who briefly replaced him before being put
in charge of the investment bank and, ultimately, all of BofA.
He’s also taking a $2 million pay cut to move to Fannie’s
corner office. That’s a rare and humble step in the world of
finance and a welcome attribute in an organization like Fannie
Mae better known for accounting shenanigans, eye-popping CEO pay
and now a $116 billion bailout tab.
A hard-nosed, principled lawyer is just the kind of leader
Fannie needs. Mayopoulos’s in-depth knowledge of corporate and
contract law should serve the agency well, as clawing back money
from lenders who sold it dodgy mortgages will remain a priority.
That surely beats having a more traditional business leader -
Fannie’s role in financing mortgages is, after all, slated to
It’s a good fit for Mayopoulos, too. With New York Attorney
General Andrew Cuomo immortalizing him by claiming BofA bumped
him as “the man who knew too much,” getting another job on Wall
Street might be hard. Running the Fannie briar patch looks a
good fit for both of them.
SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS:
- Fannie Mae named Timothy Mayopoulos as its next chief
executive officer on June 5. He had served as the mortgage
agency’s general counsel since 2009. Bank of America fired
Mayopoulos in December 2008, days after shareholders approved
the bank’s acquisition of Merrill Lynch.
- Mayopoulos will take a significant pay cut in accepting
his new job. His compensation will drop to $600,000 next year
from the $2.7 million he earned as Fannie’s top lawyer.
- Fannie Mae press release: link.reuters.com/cuh68s
- Reuters: Fannie Mae taps general counsel to be CEO
Bland ambition [ID:nN1E79Q1OQ]
- For previous columns, Reuters customers can click on
[INDI/] and [CRANE/]
(Editing by Antony Currie and Martin Langfield)
Keywords: BREAKINGVIEWS FANNIEMAE/
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