Fannie Mae's board of directors yesterday removed the interim from the title of Chief Executive Officer Daniel Mudd, another step in the...
NEW YORK — Fannie Mae’s board of directors yesterday removed the interim from the title of Chief Executive Officer Daniel Mudd, another step in the mortgage lender’s struggle to recover from an accounting scandal.
Mudd, who previously served as chief operating officer, became interim head after an executive shakeup last December at the company headquartered in Washington, D.C.
Former CEO Franklin Raines retired amid regulatory questions about accounting practices that may result in the company being forced to acknowledge it overstated earnings by as much as $11 billion in recent years.
“The board wanted to see a transformation at Fannie Mae. Over the past six months, Dan Mudd has begun to put Fannie Mae on the right track, and we are confident that Dan will continue to lead the company in this new direction,” said Chairman Stephen Ashley, who the company also announced will continue in that role.
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Ashley also noted that the board conducted its review, consideration and selection of Mudd as CEO in consultation with the Office of Federal Housing Enterprise Oversight (OFHEO), the company’s lead regulator.
Prior to joining Fannie Mae, Mudd was president and chief executive of GE Capital, Japan. He began his career at GE Capital in 1991.
Mudd will lead the government-sponsored company, which is the largest U.S. buyer and guarantor of home mortgages, through one of its most challenging periods. Federal regulators are continuing to investigate the company’s accounting procedures, which has caused the Securities and Exchange Commission to demand it restate earnings back to 2001.
OFHEO also has been investigating Fannie Mae’s accounting since last year. Among the accounting problems uncovered by the agency is the company’s violation of rules related to derivatives — financial instruments that it uses to hedge against swings in interest rates.
OFHEO has given Fannie Mae until Sept. 30 to boost its capital cushion against risk by 30 percent, or some $5 billion.
Last month, Fannie Mae again missed a regulatory deadline for filing a financial report, this time for the first quarter.
The company still hasn’t filed its third-quarter or annual report for 2004 with the SEC, and has said it is unable to provide “a reasonable estimate” of its earnings for 2003 and 2004.