Fannie Mae Chief Executive Michael J. Williams resigned Tuesday, saying he will depart as soon as the mortgage-finance giant's board names a successor.
His exit leaves the government scrambling to find new caretakers for Fannie and its sibling, Freddie Mac, at a time when policy makers at the Federal Reserve and the White House have singled out housing as a key obstacle to an economic recovery.
Just three months ago, Freddie's chief executive, Charles E. Haldeman Jr., said he planned to leave his post this year. Both companies have seen many changes within the senior ranks since the government takeover in 2008.
Williams, who is 54 years old, joined Fannie Mae in 1991 and was promoted to the top job nearly three years ago. He is the second chief executive to leave the company since the government replaced management following the takeover.
"This is a good time to move on and get someone to run the company for the next two to three years, because we still have a long way to go in housing," Williams said.
His departure comes as Fannie Mae and Freddie Mac face competing pressures. The firms' regulator, the Federal Housing Finance Agency, is focused on limiting losses, while other policy makers want the companies to do more to help the housing market, even if that requires absorbing greater upfront costs.
"I am grateful for Williams's steadfast dedication to ensuring Fannie Mae meets its public mission…while both leading his company and working with government officials," said Edward DeMarco, acting director of the FHFA, in a statement.
Fannie Mae elevated Williams, a 21-year veteran of the company, to chief executive in April 2009. His predecessor, Herb Allison, was installed by the Bush administration in September 2008 but departed to oversee the Treasury Department's Troubled Asset Relief Program the following spring.
Fannie and Freddie today are facing heavy scrutiny as the housing market's weakness persists and the government's bill for the 2008 takeovers climbs. The firms have cost taxpayers $151 billion since the takeovers.
The government's open-ended support of the firms has cast a cloud over their future and complicated employee-retention and recruitment efforts. While the Obama administration has pledged to wind down the entities, any legislative action to do so appears to be years away.
Both executives faced criticism last fall when testifying before Congress over million-dollar pay packages that were approved by their boards and the regulator in 2009. Williams stood to make a base salary of $900,000 for 2011 with deferred and bonus pay worth up to $6 million.
To register their displeasure, lawmakers on a House committee passed a bill on a 52-4 vote to put the firms on federal pay scales, which would have cut compensation for executives and many rank-and-file employees.
Williams warned at the time of retention challenges. "Are these jobs competitive? Yes," he told a congressional panel in November. "In the course of three months, I lost five senior vice presidents out of the company to financial services and other companies where I can assure you they were making more money and had better career prospects."
Last month, the Securities and Exchange Commission filed civil lawsuits against six former Fannie and Freddie executives over disclosures that regulators said misled investors about the firms' foray into subprime loans. Fannie and Freddie entered into agreements that would allow the companies to avoid prosecution. The companies also agreed to a detailed "statement of facts" concerning potential shortcomings in disclosures.
Fannie's losses have outpaced Freddie's over the past two years as a result of decisions that the firm's leaders made in 2006 and 2007 to purchase and guarantee riskier mortgages.
Williams "has done the yeoman's job trying to shepherd them through this really trying time," said Tim Rood, a former Fannie official who is now a partner at Collingwood Group, a housing-finance consulting firm. "I suspect it's had to be a pretty draining if not exhausting experience for him as of late."
Williams said he hadn't had much time to consider what he would do next. "It's been a challenging three years.… It's been a lot to do and I just felt like now was a good time to take a break," he said.
This storyfirst appeared on WSJ.com.