Fannie Mae CEO Michael J. Williams Resigns

Barely three and a half years after the federal government bailed out mortgage giants Fannie Mae and Freddie Mac, the CEO of Fannie Mae, Michael J. Williams, has called it quits.

Williams, 53, was announced as the director of the beleaguered agency in 2008 after the federal government stepped in and placed both firms into government conservatorship. The move has cost taxpayers roughly $150 billion, and that price tag could climb to well above $250 billion – a quarter of a trillion dollars – before it is all said and done.

Since his appointment, Williams has faced intense fire from critics who have blasted Fannie Mae from both sides of the aisle in regards to the agency’s alleged role in foreclosure fraud scandals to over $35 million in executive bonuses granted to key leadership in 2009 and 2010, which led to many foreclosures on the market that had been considered “robo-signed”. Williams last appeared before Congress last December in a hearing regarding the executive compensation packages that became notorious symbols of executive excess in the midst of a housing crisis that continues.

In stepping down, Williams creates yet another opening at the Federal Housing Finance Administration, the independent federal body that oversees both Fannie Mae and Freddie Mac. Given the level of difficulty President Obama has faced with filling key federal positions as of late from Senate Republicans, the successor to Williams may be some time in coming.

There are essentially two questions that emerge as a result of this news. The first question is this: What will become of the agency in the time between now and the eventual appointment of a new director? The answer to this question is unclear, primarily because Senate Republicans constitute a roadblock to virtually any key, high-level executive positions within the Obama administration.

The second question – Will this make any difference in the residential market? – may make the first answer irrelevant anyway. Most critics do not expect significant, lasting change to come as a result of Williams’s resignation. Even in the event of a new successor being appointed and confirmed immediately, it is unlikely that the agency will be able to address the residential market in a meaningful and effective way without the distraction of the executive compensation scandal that is still unresolved.

Williams intends on remaining in the position until a replacement is found. Until then, Fannie Mae continues to own or guarantee roughly half of all home mortgages in existence today in the United States, even as a chapter in the company’s history appears to draw to a close.

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