WASHINGTON (AP) — Timothy Mayopoulos, the general counsel of Fannie Mae, will be the next CEO of the government-controlled mortgage giant.
Fannie Mae, based in Washington, says Mayopoulos, 53, will become president and chief executive on June 18. He replaces Michael J. Williams, who announced in January that he would step down after a successor was found.
The government rescued Fannie and smaller sibling Freddie Mac in September 2008 after the two companies absorbed huge losses on risky mortgages that threatened to topple them. Since then, a federal regulator has controlled the two companies' financial decisions.
So far, Fannie and Freddie have cost taxpayers about $170 billion — the largest bailout of the financial crisis. It could cost roughly $260 billion more to support the companies through 2014, after subtracting dividend payments, according to the government.
Mayopoulos will be the third CEO of Fannie Mae since the government takeover. Williams oversaw the restructuring of Fannie's foreclosure-prevention efforts and managed the troubled company's reorganization.
In his executive roles, Mayopoulos has managed Fannie's human resources policies, communications and marketing, and government relations, the company said Tuesday.
Pressure has been building for the government to eliminate or transform Fannie and Freddie and reduce taxpayers' exposure to further losses.
The Obama administration unveiled a plan last year to slowly dissolve Fannie and Freddie, with the goal of shrinking the government's role in the mortgage system. The proposal would remake decades of federal policy aimed at getting Americans to buy homes and could make home loans more expensive.
Exactly how far the government's role in mortgages would be reduced was left to Congress to decide. But all the options the administration presented would create a housing finance system that relies far more on private money.
Mayopoulos said Tuesday he will work closely with Freddie and the companies' regulator, the Federal Housing Finance Agency, to help lay the foundation for a new system "that will be much more effective and reliable, and better for the country."
At the same time, Fannie will continue to place high priority on helping distressed homeowners and reducing its losses on loans to benefit taxpayers, Mayopoulos said in a telephone interview.
Edward DeMarco, the FHFA's acting director, said in a statement that Mayopoulos "brings a breadth of knowledge and experience in housing finance and financial services that is vital at this important time for Fannie Mae and the nation's housing finance system."
Fannie and McLean, Va.-based Freddie buy loans from lenders, package them into bonds with a guarantee against default and sell the bonds to investors. Together, the companies own or guarantee about half of U.S. home mortgages — about 31 million home loans — and nearly all new mortgages.
Before joining Fannie Mae in April 2009, Mayopoulos was executive vice president and general counsel of Bank of America Corp. He also has served as a senior executive at Deutsche Bank, Credit Suisse First Boston and Donaldson, Lufkin & Jenrette.
Last month, Freddie named Donald Layton, the former chief executive of discount brokerage firm E-Trade Financial Corp., as its new CEO. He replaced Charles E. Haldeman Jr.
Under a new government policy, Mayopoulos's and Layton's salaries will be capped at $500,000 per year and annual bonuses will be eliminated for all employees. Those changes came after Congress pressured the government to stop big payouts at the bailed-out companies.
In December the Securities and Exchange Commission brought civil fraud charges against six former executives at the two companies, including former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron. They were accused of understating the volume of high-risk subprime mortgages that Fannie and Freddie held just before the housing bubble burst in 2007.
No current Fannie or Freddie employees were charged or implicated.