Herb Allison, nominee to replace Neel Kashkari as the Treasury Department's assistant secretary for financial stability, got a generally easy ride with the Senate Banking Committee Thursday during his confirmation hearing. One clue that the committee will pass his nomination to the Senate floor: Half the questions from lawmakers seemed to open with the phrase, "When you are confirmed ..."
Allison received no questions about his background, but was asked some pointed questions about how the Troubled Asset Relief Program and other efforts to shore up the financial system will be administered under his leadership.
Allison spent most of his career at Merrill Lynch & Co., where he rose to president and COO. He left Merrill in 1999. Most recently, Allison was the president of Fannie Mae (NYSE:FNM), the government-sponsored mortgage securitizer that was placed in conservatorship in September. Allison was named to the Fannie Mae post at the time of the government takeover and was tasked with guiding the troubled mortgage giant back to economic health. After leaving Merrill, Allison was chairman of TIAA-Cref, the teachers' pension and personal investment management fund, for six years. Soon after joining TIAA-Cref Allison axed about 8% of the workforce.
Allison was not asked about his role in the firing of a Merrill analyst who questioned Enron Corp.'s financial condition long before the company disclosed its troubles. Documents unearthed by congressional investigators examining the Enron debacle suggested that executives complained to Allison in April 1998 that Merrill had lost business with Enron because of analyst John Olson's unfavorable reports about the company.
Senate Banking Committee Chairman Christopher Dodd, D-Conn., used the hearing to chide Treasury for problems with its modification program for troubled mortgage borrowers. Dodd urged Allison after confirmation to disclose how many homeowners are receiving assistance under the foreclosure mitigation plan and the extent to which individual loan servicers are complying with the program. "We need good data on how many loans are being modified or refinanced ... how many are being rejected for assistance in order to hold the receiver -- servicers accountable for their promises, and we need that data made public on a servicer-by-servicer basis," Dodd said.
Allison proposed to increase transparency about the program and others under TARP's umbrella. He also said he meets weekly with Neil Barofsky, TARP's special inspector general.
He declined to comment about the Treasury's role in Freddie Mac (NYSE:FRE) (Fannie's sister securitizer) and American International Group Inc. (NYSE:AIG), explaining that he has not yet had any involvement with them. - Bill McConnell
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