This is not the type of news that I like to report on my blog, but the rampant rumors about Freddie Mac’s solvency coupled with some wild speculation about the many plausible reasons for this act has compelled me to post this story.
According to the New York Times: “David B. Kellermann, the acting chief financial officer of the troubled mortgage giant Freddie Mac, was found dead Wednesday morning at his home in Northern Virginia, the police said.
The executive apparently committed suicide by hanging himself, according to people with knowledge of the investigation.
Mr. Kellermann, 41, had been Freddie Mac’s chief financial officer since September. He was named to the position when the federal government seized the company and ousted its top executives last fall. In recent weeks, according to neighbors and company officials, Mr. Kellermann had received a bonus of about $800,000. Such bonuses – which totaled $210 million for executives at Freddie Mac and its sibling company Fannie Mae – caused some controversy earlier this month, and some lawmakers called for them to be rescinded.
According to neighbors, Mr. Kellermann hired a private security firm after reporters came to his house to ask about his bonus.
Mr. Kellermann was also involved in recent tense conversations with the company’s federal regulator over its public disclosures. Freddie Mac executives wanted to emphasize to investors that the company was being run for the benefit of the government, rather than shareholders.
Mr. Kellermann’s death is the latest blow to the company. The chief executive, David M. Moffett, resigned last month after apparently clashing with the company’s regulator over compensation issues and independence.
Freddie Mac and Fannie Mae, which together own or back more than half of the home mortgages in the country, have been hobbled by skyrocketing loan defaults and have received about $60 billion in combined federal aid.”
You can image the rumors beginning to swirl in the wake of Freddie Mac’s top money man taking his own life, but I believe that it would be prudent to hold judgment until a full investigation can be completed.
Update 4/23/09– Kellermann, 41, had risen through the ranks at Freddie Mac since beginning as an accountant 16 years ago. Since taking over as CFO neighbors saw the strain and stress building. Some had even advised him to quit, but Kellermann responded that he wanted to help the company through its difficulties, which include mounting losses, several open positions and intense political pressure to stem foreclosures.
Neighbors also noticed a security detail showing up at his suburban home in the upscale Washington suburb of Vienna after executives at Freddie Mac faced intense criticism for deciding to pay retention bonuses. Later it was learned that Freddie Mac’s human resources department head had just a day earlier advised Kellermann to take time off to ‘decompress’.