Fannie Mae’s latest attempt to prepare for its uncertain future involves a major shakeup of its executive ranks — and especially the finance department — and includes replacing CFO Stephen Swad with current senior vice president and controller David C. Hisey.
The management upheaval was widely seen as an attempt to simplify and reduce the cost of running the mortgage giant by putting it in fewer hands. At a time when its mortgage business is in serious trouble, the realigned team consists mostly of individuals who have had experience that includes dealing with downturns.
In the company’s restructuring — which also cost the jobs of chief business officer Robert J. Levin and chief risk officer Enrico Dallavecchia — the clear rising star is Fannie Mae and Goldman Sachs veteran Peter Niculescu. As the new chief business officer, in a post with expanded responsibilities, Niculescu is in a position to be the company’s number-two executive, after President and CEO Daniel H. Mudd. Before joining Fannie Mae in March 1999, Niculescu was managing director and cohead of Fixed-Income Research and Strategy for Goldman, a company he joined in 1990.
Niculescu previously was Fannie Mae executive vice president and head of the capital markets business, and was responsible for managing the company’s on-balance-sheet portfolio, and investments, including overseeing interest rate risk management, asset acquisition, and funding.
New CFO Hisey joined Fannie Mae in 2005 and played a key leadership role in the company’s restatement under former CFO Robert Blakely. The company stressed that Hisey has more than 25 years of financial services experience in mortgage, consumer, and commercial lending, and capital markets.
Along with Hisey’s elevation to CFO, Michael Shaw was appointed chief risk officer, and David C. Benson, currently senior vice president and treasurer, was promoted to executive vice president, capital markets and treasury.
Fannie said that CFO Swad, who joined the company in the spring of 2007, will pursue other opportunities in private equity. Dallavecchia, who also was executive vice president, is leaving to pursue other opportunities in finance and risk management. Levin said he would retire from the company early next year, after 27 years of service.
The changes were announced as the embattled mortgage company tries to regain credibility with regulators and investors as it faces growing losses and shrinking capital.
“I think it’s a good move,” Joshua Rosner, an analyst with independent research firm Graham Fisher & Co., told Bloomberg News, adding that “it speaks to the intent to bolster confidence.”
“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,” said CEO Mudd. “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.”