Few people are as equipped to sort out a multibillion-dollar accounting mess as Robert T. Blakely, Fannie Mae's pick to be its new chief financial officer.
Blakely, 63, is best known for cleaning up the books at the company formerly known as WorldCom Inc., now MCI Inc. -- an experience that prompted Fannie Mae chief executive Daniel H. Mudd to describe him as one of the ultimate corporate veterans.
Fannie Mae's new finance chief is "a bit like one of those guys that were in World War II and they send you directly to Korea," Mudd said.
Blakely's tour at WorldCom began in April 2003, a year after chief executive Bernard J. Ebbers resigned and nine months after the company filed for bankruptcy protection.
Blakely spent his first day on the job locked in heated negotiations with some of WorldCom's creditors, who collectively held $35 billion worth of debt, he recounted to CFO Magazine last year. At the end of the day, he had persuaded nearly all of them to swap their bonds for shares of the reorganized company.
He later described the experience as "hand-to-hand combat."
At that point, WorldCom had admitted that it had improperly accounted for $9 billion. Blakely oversaw the rest of the review of WorldCom's books, which uncovered a total of $74.4 billion worth of accounting problems.
So grueling was the process that, as Blakely told CFO Magazine, he cried when the audit was completed, in March 2004.
As if dealing with past sins weren't enough, Blakely also had to get the company's accounting system in shape to produce reliable records to report new results, said Dennis R. Beresford, a board member of MCI and professor of accounting at the University of Georgia.
Between the audit and overhauling the company's internal controls, Blakely oversaw an army of consultants and accountants -- about 1,500 people. The entire effort eventually cost the company more than $300 million, Beresford said.
The challenge of overhauling MCI's accounting is what drew Blakely to the job in the first place. "I don't like stable situations," he told CFO Magazine. "Some might say that I'm a crisis junkie."
Blakely has another crisis to tackle at District-based Fannie Mae, which is in the midst of its own audit. The company previously estimated that it would have to restate $10.8 billion in previously reported earnings. Blakely will also have to overhaul Fannie Mae's accounting systems. Fannie Mae's regulator, the Office of Federal Housing Enterprise Oversight, last year raised concerns that the company still relied extensively on a manual financial editor that "carries significant risk of error."
"Fannie couldn't have picked anyone better for the job," Beresford said.
Blakely previously worked as chief financial officer at Tenneco Inc., and at Lyondell Chemical Co. .
He will join Fannie Mae after MCI completes its merger with Verizon Communications Inc., which is expected either later this year or in early 2006. Fannie Mae said it hopes to complete its restatement by the second half of 2006.