After the U.S. government took control of Freddie Mac (NYSE: FRE), David Moffett was named CEO of the mortgage giant. Six months later, Moffett is telling the board he will not stay on after March 13. The board is working with the Federal Housing Finance Agency to appoint a successor.
Moffett said he wants to return to a role in financial services. Before Freddie Mac, he was a senior adviser at Carlyle Group and spent more than a decade with U.S. Bancorp as chief financial officer. He stepped down as CFO and vice chairman of U.S. Bancorp in 2007. But how will Moffett be remembered at Freddie?
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The conditions at Freddie and the overall economy still look perilous. Freddie continues to trade as a penny stock, and a future without the auspices of government help seem millions of miles away. It's likely Freddie will ask the government for an additional capital injection, this time an amount estimated to be between $30 billion and $35 billion.
The money will likely be given to Freddie since President Obama announced last month he is relying on the company to be a centerpiece to the government's home financing and foreclosure prevention plan. But will the amount Freddie is expected to ask from the government be enough? Who knows? The way the economy is trending and lenders are ailing, it seems no amount will be enough.
When Moffett steps down March 13 and his replacement will likely be announced, one thing is for sure: Freddie's problems will not be fixed overnight. And with Freddie those problems seeming to be too big to solve and salary caps likely, the company may just not be able to attract the candidates that would stay for the long haul, and the company's top spot then becomes a revolving door of six-month CEOs. - Gerald Magpily with a contribution from Baz Hiralal
