Will Fannie CEO Mudd Step Down?

A day after the government lambasted Fannie Mae for accounting fraud some industry participants -- publicly and privately -- are wondering whether current CEO Daniel Mudd will soon step down.Financial services consultant Bert Ely said in a statement, "I don't see how Dan Mudd survives as Fannie's CEO," adding that "contrary to his assertions, and the assertions of others, that he was not involved in Fannie's numerous accounting shenanigans and otherwise unaware of them, Dan in fact was right in the middle of them." In a research note Morgan Stanley says, "As COO, Mr. Mudd shares responsibility for some of the company's mistakes." On Tuesday the Office of Federal Housing Enterprise Oversight issued a report on the company's accounting scandal, saying that back in 2003 Mr. Mudd did not follow through on allegations he was hearing about serious accounting problems at the GSE. In a conference call Tuesday afternoon company chairman Stephen Ashley strongly defended Mr. Mudd's leadership, saying nothing in the settlement or OFHEO report diminishes his confidence in the CEO. Messrs. Mudd and Ashley are defendants in a shareholder lawsuit that alleges Fannie's directors turned a blind eye to the company's accounting woes because they were involved in "mutually beneficial relationships" with the GSE.