Daniel Mudd, 48, is president and chief executive officer of Fannie Mae, the giant government-sponsored entity that, along with Freddie Mac, buys and packages billions of dollars of mortgage loans for resale in secondary markets, which helps to keep interest rates low.Mudd moved to Fannie Mae from General Electric Co. in 2000 and has previously served as chief operating officer, responsible for the origination, systems and administration areas of the company. At GE, he spent most of his career leading financial-services corporations in the United States, Asia and Europe.
Mudd graduated with a bachelor's degree in American history from the University of Virginia. An officer in the U.S. Marine Corps, he was decorated for combat service in Beirut. After he left the service, he obtained a master's degree in public administration from the John F. Kennedy School at Harvard University.
He lives in Washington with his wife, Maura, and four children.
The following interview was edited for space and clarity
Q: How did the mortgage crisis happen and who's to blame?
A: For a period of time, the market grew. It grew too fast. It had a big adjustment and a period of big dislocation came in the summer, and now we are in a period of volatility and uncertainty. One day it looks good, the next day it looks bad, the third day is a little better, so two days down, two days up. The market is looking to find a new level. And by the market, I mean home prices, housing starts and mortgage rates.
Is it in anybody's interest to see this amount of dislocation? No, I really don't think so. Rates were low for a long period of time. Home prices accelerated for a long period. Both lenders and borrowers had a huge amount of confidence that ultimately led to overconfidence. The lack of other things to invest in caused people to invest in real estate, and a lot of the products, and I think it's specifically pronounced in California, were designed to get monthly payments down at the beginning.
The artificial depression of prices in the beginning causes them to adjust in the end, upsetting the middle, and that becomes really hard. So I think the trigger was a lot of the subprime products that are now coming home to roost.