FRAMINGHAM, 22 SEPTEMBER 2008 - The federal takeover of Fannie Mae earlier this month has resulted in several upper management changes at the mortgage financing firm, including the exit of its CIO.
Rahul Merchant, who also was an executive vice president at Fannie Mae, was one of four executives who resigned last week, according to an announcement issued by the company on Friday. Merchant joined Fannie Mae in 2006 from Merrill Lynch & Co., where he served as head of global business technology.
At a mortgage-industry technology conference in February, Merchant alluded to the financial problems that are now underpinning the Bush administration's proposed US$700 billion bailout of the financial services sector. That cost is in addition to the potential $200 billion cost of rescuing Fannie Mae and its mortgage rival Freddie Mac, and the $85 billion that the government is paying to buy majority ownership of insurer American International Group Inc.
Merchant said at the conference that IT organizations will need to focus on "improving credit risk management by providing more precise and timely business information, including early warning reports and improved credit loss metrics," according to a summary of his remarks prepared by Fannie Mae. He also said that default and foreclosure rates "demand better decision models."
IT is a big operation at Fannie Mae, which is formally known as the Federal National Mortgage Association. As CIO, Merchant had management responsibility for more than one-third of the company's total workforce of about 6,000 people.
In a separate statement on Friday, Fannie Mae said its technology and operations business unit will now report to Michael Williams, its chief operating officer.
A Fannie Mae spokeswoman said officials at the company -- which named a new CEO immediately after the government takeover -- aren't commenting on the internal changes beyond the two announcements.
