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Moffett resigning as Freddie Mac CEO

March 03, 2009|Zachary A. Goldfarb | Goldfarb writes for the Washington Post.

WASHINGTON — The government-appointed chief executive of Freddie Mac said Monday that he was resigning from the mortgage-finance giant, less than six months into the job.

David Moffett's resignation comes amid growing losses at the company and unresolved questions about whether Freddie Mac should follow the path of a private company trying to make its way back to profitability or that of a government agency whose only goal is benefiting the public.

Moffett said he would step down to pursue opportunities in the financial services sector. He was tapped along with a new chief executive for Fannie Mae in September, when the government seized the two housing finance giants.

He intends to step down by March 13, when Freddie Mac, which is based in McLean, Va., plans to have an interim replacement in place.

"We are very sorry to see David go," Freddie Mac Chairman John Koskinen said. "He made valuable contributions to Freddie Mac as the company transitioned into conservatorship."

Freddie Mac said it expected, as previously announced, to need as much as $35 billion in taxpayer dollars to stay solvent after it reported fourth-quarter earnings, expected in a few days. That would bring the total government investment in the company to nearly $50 billion.

The Treasury recently doubled its commitment to both Freddie Mac and Fannie Mae, saying it would backstop them up to $200 billion each. Fannie Mae asked for $15 billion last week, its first infusion.

The capital infusions largely cover losses on mortgage guarantees and mortgage-related investments the companies made during the housing boom. Those guarantees and investments are continuing to lose value for both companies as the economy worsens. In addition, the companies are taking a financial hit on a broad program to restructure mortgages for thousands of borrowers who can't afford their monthly payments.

But, internally, Moffett and his counterpart at Fannie Mae, Herbert Allison, have been wrestling with competing demands. They have been working to help the public while retaining a private market-oriented culture, which the companies have said creates conflicts in day-to-day decision making.

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