Fannie Shuffles Its Top Leaders

Insiders to Replace Departing Officials

Struggling mortgage giant Fannie Mae shook up its senior management yesterday, announcing the departure of its chief financial officer and two other top executives.

Daniel H. Mudd will continue to serve as chief executive and the departing company officers will be replaced by other Fannie Mae insiders.

The company, battered by the meltdown in the mortgage market, said it was putting in place a team that will help it endure mounting losses that have put the firm's survival at stake.

"This team will be responsible for meeting the dual objectives of conserving capital and controlling credit losses," Mudd said in a statement. "As we move through the bottom of this cycle, maintaining capital, managing credit and driving revenues are the priorities."

District-based Fannie Mae -- along with its sister Freddie Mac of McLean -- are the largest source of mortgage finance across the country. Both made bad bets on securities backed by home loans and have been badly bruised by the housing bust. The companies' shares have lost most of their value this year.

Last month, Congress gave the Treasury Department authority to lend money to the mortgage giants or buy their stock to help prop them up.

Under the management shake-up, chief financial officer Stephen Swad, who joined the company just last year from Internet giant AOL, is exiting "to pursue other opportunities in private equity," according to a Fannie Mae statement. He will be replaced by David C. Hisey, Fannie's senior vice president and controller, a three-year veteran of the firm.

Robert J. Levin is retiring as chief business officer and will be replaced by Peter Niculescu, head of the company's capital markets business, who has been with the firm nine years. And Enrico Dallavecchia, also leaving the company "to pursue other opportunities," is being replaced as chief risk officer by Michael Shaw, a senior vice president for credit risk oversight, who has been with Fannie for two years.

In addition, David C. Benson, senior vice president and treasurer, has been promoted to executive vice president of capital markets and treasury.

Joshua Rosner, managing director of independent financial service firm Graham Fisher in New York and a Fannie Mae critic, said the shake-up made sense but wondered whether it would make a big difference.

"The reality is that this management and this board have failed investors and failed their public mission," he said. "Why should we have great confidence that they have finally made the right choice after stumbling?"

Rosner said it was surprising that Mudd didn't leave with his team. "Mudd should probably be held accountable as well," he said, though he noted that Mudd was named chief executive once the company was already in trouble during the middle of an accounting restatement in December 2004.