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Wondering What's Next For Fannie And Freddie

There was hardly any mention of mortgage giants' philanthropy at yesterday's news conference, only that government "will review the charitable activities."

But Bo Sims, a staff member at DC Central Kitchen, feared the worst. "I don't suspect the government will take up their slack."

DC Central Kitchen prepares 4,500 meals a day for distribution to about 100 agencies, including emergency shelters and job training programs. Jodie L. Kelley, a Fannie Mae vice president and deputy general counsel, sits on its board of directors.

The threat of cutbacks could be another blow to local nonprofits already struggling to secure corporate funding in this weakened economy, Sims said.

"We are going to hurt unless we find someone to supplement that loss," Sims said. "But that's not going to be easy."

Fred Malek, chairman of Thayer Capital, a private-equity firm that invests in the hotel industry, said the companies' philanthropic activities were probably their greatest contribution to the local scene. "It remains to be seen whether under the current state of duress, any of that will or should continue."

In a farewell message to Fannie Mae employees Sunday, chief executive Daniel H. Mudd wrote: "There are still millions of homeowners in pain, families with a dream of owning a home, and investors depending on you. Please give your colleagues and my successor your full support."

For now, current and former workers are worried about their own welfare.

Fannie Mae for many years granted stock options to all sorts of employees, from cafeteria workers to senior executives. Those options gave people a right to buy shares at a set price on a given date, much of which are for prices far above what the stock trades for now.

Bill Maloni, who worked at Fannie Mae for 20 years, most recently as the senior lobbyist, received a letter from the company's investment plan last week saying he has stock options that are about to expire at $69 per share. The company's shares closed at $7.04 on Friday.

"People have been seeing whatever part of their net worth expressed by Fannie Mae shares fall mightily over the past year," Maloni said.

Maloni said former longtime employees are asking questions about whether the government intervention makes sense given that Fannie Mae seemed to be doing what it needed to do to strengthen its financial position. "The place has been dragged through the mud," he said.

Staff writer Thomas Heath contributed to this report.

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