Senior Management Shakeup at Fannie Mae

Aug.28.08 | About: Fannie Mae (FNMA)

Fannie Mae (FNM), announced Wednesday a series of senior executive appointments, effective immediately. The executives include Peter Niculescu, who has assumed the duties of Chief Business Officer, as well as the appointments of David C. Hisey as Chief Financial Officer and Michael Shaw as Chief Risk Officer. This is a move designed to intensify the GSE’s efforts of overseeing and implementing the company’s recently announced capital management and credit loss reduction plan.

“After setting forth our capital and credit plan August 8, we are now putting a senior management structure in place to drive this plan across the company,” President and Chief Executive Officer Daniel H. Mudd said. “This team will be responsible for meeting the dual objectives of conserving capital and controlling credit losses while Fannie Mae continues to provide crucial liquidity to the U.S. housing and mortgage markets. As we move through the bottom of this cycle, maintaining capital, managing credit and driving revenues are the priorities — and we have to organize and staff accordingly.”

Peter Niculescu, 48 years old, joined Fannie in 1999. Before that, he was managing director and co-head of Fixed-Income Research and Strategy for Goldman Sachs. Niculescu replaces Robert Levin, a 27-year veteran of the company, expected to retire early next year. The shake-up establishes Mr. Niculescu as the second-most powerful executive at Fannie, after Chief Executive Officer Daniel Mudd.

David C. Hisey, also 48 years old, formerly controller, was named Executive Vice President and Chief Financial Officer. Mr Hisey, is replacing Fannie Mae Chief Financial Officer Stephen Swad, who, according to the company “has chosen to leave the company and will pursue other opportunities in private equity business”. Mr Hisey, will be responsible for ensuring the accuracy, integrity, and timeliness of the company’s financial reporting and accounting, and internal controls.

Michael Shaw, 61, has been named Chief Risk Officer. Prior to joining Fannie Mae in 2006 as Senior Vice President — Credit Risk Oversight, Shaw was a senior credit executive — Consumer Banking and senior risk executive, Policy, Reporting, Analytics and Finance at J.P. Morgan Chase & Co.

Mr. Shaw, is replacing Enrico Dallavecchia and is taking over as chief risk officer. Mr Dallavecchia is also leaving Fannie. Mr Shaw will have overall responsibility for credit, market, counterparty, and operational risk oversight for all business units within Fannie Mae, and will oversee the formulation of risk policies as well as the measuring, reporting, and monitoring of Fannie Mae’s risk profile.

The management changes were announced after market hours, impacting co’s stock positively as it closed up $0.86 cents or 15% to mid $6 levels. Fannie and Freddie (FRE) own or guarantee more than $5 trillion of U.S. home mortgages. Both GSEs have recorded combined losses of $14 billion over the past twelve months.