WASHINGTON Fannie Mae Chief Executive Michael Williams said on Tuesday he was stepping down from the government-controlled mortgage firm, which is at the center of a fight over how to reduce foreclosures.
He will depart after a successor is appointed to lead the country's largest provider of U.S. residential mortgage funding, the company said in a statement.
With Williams' announced departure, the government now needs to find leaders for both of the two largest U.S. housing finance companies. Freddie Mac CEO Charles Haldeman announced plans to step down in October.
Williams began working at the Fannie Mae in 1991. He was appointed chief executive in 2009 after Fannie Mae and Freddie Mac were seized by the government at the height of the financial crisis as mortgage losses mounted.
The two companies have soaked up about $169 billion in taxpayer support since being placed in conservatorship.
"I decided the time is right to turn over the reins to a new leader," Williams said in the statement.
To provide funds for housing, the two congressionally chartered companies buy mortgages from lenders and repackage them as securities for investors, which they then guarantee.
They were huge players in the mortgage market even before the housing bubble burst. As private mortgage financing evaporated, their footprint grew even larger.
Along with the Federal Housing Administration, they now provide the funds for about 90 percent of all new U.S. mortgages.
Even so, the Federal Reserve last week recommended expanding their role to help combat foreclosures and revive the downtrodden housing market. William Dudley, the influential president of the New York Federal Reserve Bank, argued that loan principal reductions should be considered.
Two Republican senators on Tuesday criticized the central bank for overreaching with its proposals. The regulator for Fannie Mae and Freddie Mac has only allowed the Obama administration to use the firms for targeted foreclosure prevention programs.
"I am surprised that Williams hung out as long as he did," said Anthony Sanders, a professor of real-estate finance at George Mason University. "It is a stressful job to explain to Congress and taxpayers how all that money was lost," he said.
The Obama administration, and Democratic and Republican lawmakers all agree that Fannie Mae and Freddie Mac eventually should be shuttered to reduce the government's role in the mortgage market.
However, they disagree over how quickly to unwind the money-losing firms and what role the government should play in the future.
Williams and Haldeman came under intense pressure from Congress to rein in compensation at the firms after it was disclosed last fall that they paid out $12.79 million in bonuses for 10 executives.
Both argued the hefty pay packages were needed because the uncertain future of their firms was making it difficult to attract and retain staff.
Williams, who worked his way up the ranks from the head of the company's eCommerce division to chief operating officer and eventually CEO, helped reform Fannie Mae's control standards after an accounting and financial restatement scandal.
The company did not provide details on when Williams' successor would be named.
(Reporting By Rachelle Younglai, additional reporting By Margaret Chadbourn; Editing by Kenneth Barry)