Freddie Mac CFO Resigns; Analyst Questions the Timing
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Freddie Mac, the second-biggest source of money for mortgages in America, said yesterday that Chief Financial Officer Martin Baumann resigned.
Chief Operating Officer Eugene Mc-Quade will take over as CFO until a replacement is found, a spokesman for the McLean, Va.-based company, Michael Cosgrove, said in an interview.
Mr. Baumann, 58, joined Freddie Mac in March 2003 as the company began restating its earnings that year by $5 billion to correct errors in accounting made from 2000 to 2002. The company has since been unable to provide quarterly financial reports as it overhauls its accounting and financial reporting policies, disappointing Wall Street analysts.
“The timing of the resignation doesn’t seem appropriate given where they are in the process” of getting financial reports in order, said Edwin Groshans, an analyst in New York at securities firm Fox-Pitt Kelton Inc., a New Yorkbased unit of Swiss Reinsurance Co.
Freddie Mac and the larger Fannie Mae were chartered by the government to raise money in the bond market to make funding more available for home loans. They make money on the difference between their cost of borrowing and the returns on their $1.4 trillion in mortgage investments, and on fees collected from lenders for guaranteeing credit on mortgage-backed securities.
