The past is coming back to haunt former Fannie Mae chief executive James A. Johnson.
Goldman Sachs investors next month will decide whether to re-elect board member Johnson, who ran Fannie from 1991 to 1998. He is facing vocal opposition from a large mutual fund investor, which has cited Johnson's mortgage industry past as part of what it calls his presence "at the center of several egregious corporate governance debacles."
Robert D. Goldfarb and David M. Poppe, managers of the Sequoia Fund, wrote in a letter last week that clients should oppose Johnson because of his history at Fannie and as a director of United Healthcare and KB Home, whose executives were involved in the back-dating of stock options.
"We believe Mr. Johnson's history should disqualify him from service on the board of any public company," wrote the Sequoia managers, who held 1.4 million Goldman shares at the end of 2011. "This information has long been in the public record. Yet Mr. Johnson remains the chairman of the compensation committee at Goldman Sachs and at Target."
As Fannie Mae chairman and CEO, Johnson was close to Countrywide Financial Corp. founder and CEO Angelo Mozilo and eagerly courted that lender’s business.
In time Countrywide became Fannie’s largest seller/servicer client, selling billions of dollars in alt-A loans—mortgages that later caused massive losses at both companies.
Over the years Fannie offered huge volume discounts to Countrywide including breaks on its guarantee fees. However, most of this was not done on Johnson’s watch at the GSE.
His ultimate achievement at Fannie, though, was courting the support of federal politicians, donating money to them, and gaining political protection from the GSE’s critics in Congress.
— Paul Muolo contributeded to this report
