THE FREDDIE MAC SCANDAL:
In case you've been on vacation the past seven days it was "FreddieMac Week" in Washington -- and everywhere else as well. The firingof company president David Glennand the sudden "retirement" of its long-time chairman and CEO LelandBrendsel consumed the business and trade press. According to numerousinterviews conducted by National Mortgage News with multiple industry sources, this is how it went down:
THE INSIDE STORY:
Industry sources close to Freddie Mac note that the chain events resultingin Glenn's firing, Brendsel's retirement and the resignation of another top employee actually started long beforelast Monday, June 9. About a year ago, Freddie Mac's board had asked Brendsel to put together a succession plan.The board wanted new blood in the company -- and didn't want to wait. But Brendsel delayed. Then, finally, he startedsomewhat of an official search for a successor. Glenn, though, apparently wanted the top job quite badly. But thetwo men, once considered somewhat close, were no longer. One former GSE official described their relationship asa "dysfunctional couple."
GLENN'S DIARY HABIT:
Glenn also had a pedantic habit to keep diaries of many of his meetingswith Freddie Mac employees -- and outside executives. His diaries were actually spiral notebooks, and he kept abunch of them on his office shelf. Sources say the diaries go back about 13 years. But now the legal question begs.Whose property are they? Glenn's or the company's? Glenn apparently altered some of the diaries, especially inregard to the re-audit. Freddie Mac's board (in particular former Treasury undersecretary George Gould) was steamed at three things: Brendsel notpicking a successor, Freddie Mac not releasing first-quarter earnings and losing market share to Fannie Mae. When it became apparent that Glennwas altering his diaries, the board used it as an excuse to clean house.
THE BIG QUESTION:
A source familiar with the matter says new Freddie Mac chief executive Greg Parseghian wants the diaries (at least someof them, the relevant ones) released. The source says this is for certain. (Freddie Mac won't comment on this point.)But now Freddie Mac's lawyers and counsel for Glenn are going through a "back and forth" as to whichside has legal rights to his writings. (See National Mortgage News issue of Monday, June 16.)
ANOTHER TOP HEAD TO ROLL:
Sources also say that at least one senior Freddie Mac official could losehis job soon and that Mr. Parseghian is vowing to bring in the best help he can find -- and fast.
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