BofA Blunder May Be Boon for Fannie
NEW YORK (
) -- When
Fannie Mae
(FNM)
hired former
Bank of America
(BAC) - Get Report
general counsel Tim Mayopoulos in April, one could be forgiven for thinking it a case of a zombie company picking up a reject from a merely troubled one.
Five months later, it looks like Fannie CEO Mike Williams might have made a smart move rather than a desperate one.
It turns out Mayopoulos may be more than just another guy who lost his job as two giant banks got together in the middle of a dire recession. A report in
The New York Times
Tuesday suggests Mayopoulos may have been fired because he urged BofA to tell its shareholders about billions in unexpected losses at
Merrill Lynch
. BofA's failure to take that step is the subject of an inquiry by New York Attorney General
Andrew Cuomo and a proposed $33 million settlement between the bank and the
Securities and Exchange Commission
that is being held up by Jed Rakoff, an iconoclastic New York Federal court judge.
BofA CEO Ken Lewis told Cuomo and his investigators that Mayopoulos was let go because the acquisition of Merrill made him expendable, but the article notes he was not replaced by Merrill's general counsel.
Mayopoulos wouldn't tell Cuomo's staff what advice he gave BofA's bosses. Joe Price, BofA's CFO, told them Mayopoulos advised him not to disclose the losses.
In other words, many questions remain about the highly controversial deal, where BofA took over Merrill during one of the scariest weeks in the history of Wall Street. Still, don't be surprised if Mayopoulos turns out looking a lot better than many other senior BofA executives when this soap opera is finished.
That still wouldn't do anything for the poor suckers buying the shares of Fannie Mae, which like its cousin,
Freddie Mac
(FRE)
is running on fumes. But with trillions of taxpayer dollars at stake between these companies, and others like
AIG
(AIG) - Get Report
and
Citigroup
(C) - Get Report
, it's nice to think that some of the rejects they're hiring may be just the kind of rejects we want to help turn things around.
--
Written by Dan Freed in New York
.
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