(Bloomberg)—Fannie Mae Chief Executive Officer Timothy Mayopoulos plans to step down by the end of the year, creating a potential vacancy atop a government-controlled company that is central to the U.S. housing system.
While Fannie Mae didn’t name a replacement in its statement Monday, it did say Mayopoulos will work closely with the company’s board to ensure a “smooth transition and succession.” In announcing that the board will conduct a search for a successor, the mortgage-finance giant said Chief Financial Officer David Benson had been promoted to president.
Mayopoulos has led Washington-based Fannie Mae since 2012, and lawmakers have grappled with what to do with the company and smaller rival Freddie Mac throughout his tenure. The government took control of both companies as the U.S. mortgage market collapsed in 2008, eventually injecting them with $187.5 billion to keep them afloat in the wake of the financial crisis. Both have returned to profitability and are required to turn over almost all of their profits to the Treasury Department under the terms of their bailout agreements.
Compensation Cap
One potential hurdle to finding a replacement for Mayopoulos is that Congress in 2015 capped pay for the CEOs of Fannie and Freddie at $600,000 a year. Lawmakers did so after the companies’ regulator, the Federal Housing Finance Agency, approved raises that would have increased compensation to about $4 million annually.
Fannie and Freddie don’t issue mortgages. Instead, they buy loans from lenders, wrap them into securities and make guarantees to investors in the bonds in case borrowers default. That process is crucial to the housing market because it frees up cash for lenders to underwrite more mortgages.
Hedge funds and other investors who own Fannie shares will probably be keenly interested in who replaces Mayopoulos, though the fate of the two companies is in the hands of Washington policy-makers.
Benson has been Fannie’s CFO for five years, the company said in its statement. He previously oversaw capital markets, securitization and corporate strategy, the company said. He joined Fannie Mae in 2002 after 14 years at Merrill Lynch unit, according to the statement. Celeste Brown, Fannie Mae’s deputy CFO, will replace Benson as CFO.
To contact the reporter on this story: Jesse Westbrook in Washington at [email protected] To contact the editors responsible for this story: Jesse Westbrook at [email protected] Gregory Mott
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