Freddie Mac CFO faced extraordinary pressures
Presumed suicide amid prospect of ongoing losses, regulatory probes
By Patrick Rizzo and John W. Schoen
msnbc.com
In extraordinary times, exceptional things are often asked of ordinary people.
There’s no doubt that Freddie Mac has been going through unimaginable changes in the past year that have put its officers and employees under tremendous pressure: an ongoing accounting investigation by regulators; the prospect of continued housing-related losses; and uncertainty about the long-term viability of the company.
That’s the environment into which David Kellermann was thrust when he was named interim-chief financial officer in September. And it was the world he left behind, along with his wife and young child, when he died Wednesday, hanged in his basement, an apparent suicide.
A self-described "financial services executive with close to 20 years of experience," including degrees from the University of Michigan and George Washington University’s Graduate School of Business, Kellermann was an expert in the complex mortgage-backed securities and derivatives that are clogging the nation’s home mortgage industry.
“With that critical experience, I have succeeded at an ever-increasing level of responsibility in managing a Company with $1 trillion-plus balance sheet,” Kellermann wrote in his profile on the LinkedIn social networking site. “My definition of success is the full utilization of my experience and abilities, and those of a carefully chosen and trained team along the lines of excellence.”
By all accounts, Kellermann was devoted to his job and to Freddie Mac’s mission of expanding homeownership to millions of American families. Neighbors said he also devoted himself to the American Dream that was Fannie Mac’s mission to advance.
“They described this family as a family that embraced life,” CNBC’s Hampton Pearson reported. “First on the block to put up Christmas decorations, that kind of thing, and participate in neighborhood functions going on.”
Word of Kellermann's death brought a series of condolences from government officials.
"Our deepest sympathies are with his family and his colleagues at Freddie Mac during this difficult time," said Treasury Secretary Tim Geithner in a statement.
“David was a man of great talents,” said John Koskinen, Freddie Mac’s interim CEO, also in a statement. “He dedicated those talents to Freddie Mac for more than 16 years, serving in many business and finance capacities before recently taking the reins as acting chief financial officer. His extraordinary work ethic and integrity inspired all who worked with him. But he will be most remembered for his affability, his personal warmth, his sense of humor and his quick wit. David was a friend to many in the Freddie Mac family, and we mourn his passing.”
But the challenges the 41-year-old Kellermann faced in his job would test the most seasoned financial executives. Last September, after the falling home prices and the global financial panic sent mortgage giants Fannie Mae and Freddie Mac reeling, the government stepped in and nationalized the two quasi-independent agencies as the rising pace of foreclosures sent them reeling toward insolvency.
Last month, Freddie Mac accounted it had lost more than $50 billion last year. Despite $44 billion in government loans and a $200 billion backstop in guarantees from the Treasury, Freddie and Fannie still face huge losses as home prices continue falling in many parts of the country.
“Freddie Mac, together with Fannie Mae, are going to be suffering huge losses,” said Peter Wallison, a fellow at the American Enterprise Institute and author of several books on Fannie and Freddie. “Many of these have already come to light. I expect many more to come to light.”
The company, which owns or guarantees about 13 million mortgages, is also the subject of ongoing investigations by both the Securities and Exchange Commission and the Justice Department, concerning accounting issues.
CONTINUED : No sign of wrongdoing
--------------------------------------------------------------------------------
1 | 2 | Next
msnbc.msn.com |
