Freddie Mac’s new chief executive, Donald Layton, urged critics to keep an open mind about the troubled government-sponsored enterprise and pledged to focus on “the nuts and bolts” to improve efficiency.
“The first thing I have to do is a lot of homework, a lot of studying, a lot of talking to people. It’s important not to prejudge them,” Layton said in an interview with American Banker about an hour after he was officially named to the job Thursday afternoon. “The core component of the job is to make sure it runs as a high-quality operation, that it process guarantees, and gets the nuts and bolts done first. The company says it has issues with that.” (American Banker is a sister publication to National Mortgage News.)
Freddie Mac is now profitable on an operating basis.
Layton, a former CEO of online brokerage E-Trade Financial Corp. (EFTC), has been viewed as the front-runner for weeks and an announcement had appeared imminent for several days. He is considered a turnaround specialist after working out that company’s troubled loan portfolio. He spent 30 years at JPMorgan Chase (JPM) and is an outside director of American International Group (AIG).
Layton, 62, is slated to join Freddie Mac on May 21 and be its third chief executive in four years. Freddie’s current CEO, Charles E. Haldeman Jr., who joined the company in 2009, said in October that he planned to step down.
Fannie Mae and Freddie Mac have become favorite punching bags for members of Congress, and Layton acknowledged the difficulty of the companies operating under conservatorship.
“Having a company like Freddie, and also Fannie, have uncertain futures for years on end as part of the conservatorship makes it hard on an organization,” he says. “The conservatorship was not designed to last years on end.”
Edward DeMarco, the acting director of the Federal Housing Finance Agency, has repeatedly called on Congress to end the uncertainty about the future of Fannie and Freddie.
“The end will come,” Layton says. “The only thing I can determine from the conventional wisdom is that the process is going to take a while.”
Congress has limited the new CEO’s pay to $500,000, but Layton said that was not a concern.
“This is a career-capper,” says Layton, 62. “The salary being top dollar was not an issue because I regard it as a mix of corporate and public service work, and that hybrid is perfectly fine for me and my particular circumstance. I regard myself as an older person with a certain amount of success and I’m doing this as part of public service.”