| The executive who was fired by Bank of America Corp. after calling for the disclosure of Merrill Lynch & Co. losses before the bank completed the acquisition of the investment banker has been chosen to run the Federal National Mortgage Association. The selection of the former BofA executive is unlikely to improve a contentious relationship between the two financial firms.
Fannie Mae disclosed in January that Chief Executive Officer Michael J. Williams decided to step down. Williams, who replaced Herbert M. Allison Jr. as CEO in 2009, agreed to stay on until a replacement was found. That day has arrived. The Washington, D.C.-based company’s board of directors has approved Timothy J. Mayopoulos as president and CEO of the secondary lender, according to a statement from Fannie’s regulator and conservator, the Federal Housing Finance Agency. “Tim brings a breadth of knowledge and experience in housing finance and financial services that is vital at this important time for Fannie Mae and the nation’s housing finance system,” FHFA Acting Director Edward J. DeMarco said in the statement.
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Fannie photo of Tim Mayopoulos
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DeMarco was constrained in his search for a CEO because of a compensation plan he unveiled in March that targeted compensation at $500,000 and eliminated bonuses for the CEOs of Fannie and its government-controlled rival Freddie Mac. The chiefs of much smaller firms earn millions in compensation.
In its own announcement, Fannie said that the new CEO begins his assignment on June 18, at which point he will also join the board of directors.
He started with Fannie in April 2009 and currently serves as executive vice president, chief administrative officer and general counsel.
“His deep understanding of the unique challenges Fannie Mae is facing and his effective working relationships with our regulator, management, the board, and external partners will serve the company and industry well,” Fannie Chairman Philip Laskawy said in the statement. “Tim’s appointment enables the company to sustain its rebuilding efforts and to accelerate our contributions to improving the nation’s housing finance system for the future.”
Mayopoulos — whose 25 years’ experience includes roles at Deutsche Bank AG, Credit Suisse First Boston and Donaldson, Lufkin & Jenrette Inc. — is the former general counsel for BofA.
New York Attorney General Andrew M. Cuomo, who filed a lawsuit in New York’s supreme court against BofA in February 2010, claims that the bank hid $16 billion in Merrill Lynch losses from shareholders and Mayopoulos prior to the December 2008 acquisition of the troubled investment banker.
Mayopoulos was reportedly fired after confronting former BofA chief financial officer Joseph L. Price about disclosure of the massive losses.
The move is likely to exacerbate an already strained relationship between Fannie and BofA.
In February, BofA said that it would cease delivery of purchase-money mortgages to Fannie and withhold refinance transactions except for loans processed under the Home Affordable Refinance Program.
“The non-renewal of these contractual delivery commitments and variances was influenced, in part, by our ongoing differences with FNMA in other contexts, including repurchase claims,” the Charlotte, N.C.-based company said at the time.
Mayopoulos takes over a company that has reported $52 billion in new business acquisitions so far this year and $653 billion in business purchases during 2011. Its book of business stood at $3.2 trillion as of April 30.
Fannie has cost U.S. taxpayers $116.1 billion since it was placed in conservatorship in 2008 — though no draws were requested from the Department of the Treasury for the first quarter of this year as a result of positive earnings.
