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Morgan Stanley Tapped To Assess Fannie, Freddie
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Morgan Stanley's team is headed by top-ranking executives including Robert Scully, a member of the company's office of the chairman, and Ruth Porat, who leads the firm's global financial institutions group. Morgan Stanley declined to say how many bankers it had detailed to the effort in Washington and New York. The contract runs until Jan. 17, three days before the next U.S. president is to be sworn into office.
The investment bank is charged with providing a "sensitivity analysis on the financial profile" of Fannie Mae and Freddie Mac and also an "assessment of appropriate capital structures." In addition, the firm "will provide an analysis of the relationship between" Fannie Mae and Freddie Mac "and the broader capital markets," the contract states.
Fannie Mae and Freddie Mac have been providing reams of financial projections and reports to the Treasury as part of this wide assessment, people close to the effort said.
Paulson, a former chairman of Goldman Sachs, is accustomed to relying on top executives from his old firm to keep in touch with the markets. For most of the first part of his tenure as Treasury secretary, he leaned on Robert K. Steel, the department's undersecretary and his former number two at Goldman Sachs.
After Steel left the Treasury last month to become chief executive at Wachovia, Paulson tapped his close friend Wilson. Last month, Wilson received a phone call from President Bush, who urged him to take the job.
The connections between the men run deep. Wilson and Bush went to Harvard Business School together. Paulson met Wilson at Dartmouth College and helped recruit him to Goldman Sachs in the late 1990s.
Over the past year, a broad range of firms, including Wachovia and National City, have turned to Wilson for advice on navigating the credit crisis. As head of Goldman Sachs's financial institutions group, he also advised Bank of America on its acquisition of Countrywide Financial.
"He's somebody who already knows everybody on Wall Street," one Treasury official said. "He always knows what's going on."
Wilson will work until January for no pay and has responsibilities at the Treasury beyond Fannie Mae and Freddie Mac. He was hired as a "special government employee," a designation that does not require him to sell his personal investments as full-time Treasury officials must do.
