Fannie Mae CEO to lead bank bailout

April 18, 2009|Jim Kuhnhenn, Associated Press

WASHINGTON - The White House turned to an experienced former investment banker yesterday to run the federal government's $700 billion bank rescue effort, selecting the head of mortgage giant Fannie Mae as an assistant Treasury secretary.

Herbert Allison Jr., Fannie Mae's president and CEO, will replace Neel Kashkari, a holdover from the Bush administration.

Allison, who must be confirmed by the Senate, would bear the title of assistant Treasury secretary for financial stability and counselor to Treasury Secretary Timothy Geithner.

He would be in charge of the Troubled Asset Relief Program, the fund that has injected billions of dollars into banks in hopes of unclogging credit. He would inherit a program that has been sharply criticized in Congress and which banks have come to view warily because of the restrictions attached to receipt of its funds.

Fannie Mae is closely overseen by federal regulators, making the chief executive's job tough to fill in the private sector. The company appears likely to turn to an insider as Allison's replacement.

The Wall Street Journal reported yesterday that Fannie Mae was expected to name Michael J. Williams, the company's chief operating officer and a longtime executive as Allison's replacement. Fannie Mae declined to comment.