My Name is Mudd
October 6, 2008 2 Comments
An article in yesterday’s New York Times details the contribution made by Fannie Mae’s former chief executive officer, Daniel Mudd, toward the financial meltdown we are experiencing in the US mortgage securities market. Mr. Mudd, like many other CEOs of his time, joined the group of lemmings chasing profits, placating investors and taking excessive risks. The article points out that Mr. Mudd told employees to “get aggressive on risk-taking, or get out of the company.” When Mr. Mudd’s chief risk officer warned him about the housing bubble and the potential negative impact to the company, Mr. Mudd argued that the market, shareholders and Congress all thought the companies should be taking more risks, not fewer.
While his name is literally Mudd, Fannie’s CEO also serves as a metaphor for the dozens of CEOs and many more executives who failed to heed the warnings of risk professionals in the face of external pressure and personal greed. Do you agree? Please join the conversation below.