Waiting for the New Freddie Mac CEO

WASHINGTON, DC-The search for a new CEO at Freddie Mac appears to be drawing to a close, the Wall Street Journal reported last week. Three candidates have met with the the Federal Housing Finance Agency, the Department of Housing and Urban Development and the Treasury Department, and a decision is expected to be made soon.

The names floated by the Journal, including Donald Layton, the former CEO of E*Trade Financial who is seen as the top candidate, have delighted industry executives with their expertise and credentials. “I’m very happy and surprised to see names of that caliber,” Willy Walker, chairman, president and CEO of Walker and Dunlop, tells GlobeSt.com.

It has been close to six months since Freddie Mac announced that yet another CEO was stepping down, in this case Charles E. "Ed" Haldeman, Jr. Haldeman is still at the helm of the GSE, though, and his pending departure has not impacted the GSE’s operation a bit, Walker says. “There hasn’t been a gap in leadership at all,” he says. “In fact, that’s the last thing that the GSEs and multifamily borrowers and lenders are worrying about right now.”

Rather, Walker’s concern as the US heads into the heart of the election cycle is that Fannie Mae and Freddie will be allowed to die a death of a thousand cuts. “It’s not conceivable major legislation will be passed between now and the presidential election that would determine which way forward the GSEs will go,” he says. After the president is elected—whether it’s another Obama Administration or a Romney Administration—it is unlikely that GSE reform will be a top priority for a while. “With no clear path, what you have is good, talented people at the agencies drifting away. A major brain drain of talent is almost as effective in shutting down the agencies as a Congressional mandate.”

Unfortunately, Walker says, that is what is likely to happen. “Congress is basically saying ‘let’s kick this can down the road.’ ” A strong CEO could change this, however, he says, hopefully.

Besides boosting employee morale, the new CEO will need to take the lead in any discussions over the agencies’ fate—particularly the multifamily business units, which even Congress is beginning to recognize as a separate and more successful operation than the single-family home operation. “Both agencies have been asked to study the potential spinning off of the GSE’s multifamily business,” Walker says. “What the new CEO thinks of those proposals and how he or she goes about supporting it, or not, will be the greatest managerial challenge.”