With a Masters in Public Administration in hand and experience working in the Pentagon, Mudd’s long-term goal after graduate school, as he recalls, was to pursue a career in government.
Working in business was to be a stepping-stone to public policy, Mudd says.
“It became clear to me that an important aspect of policy was understanding how the business side of the economy works—where you made payroll and business decisions,” Mudd says. “I thought I would go and do that for a few years and probably return to government.”
But after taking a job at General Electric Capital, Mudd’s experience in the world of finance took him through “increasing positions of responsibility” until he finally arrived at Fannie Mae in February 2000, having previously served as President of GE Capital Asia-Pacific from 1996 to 1999.
For Mudd, the job at Fannie Mae was a partial realization of his early desire to work in government.
Furthermore, Mudd says he found his education at the Kennedy School to be particularly useful during his employment in this form of “quasi-government service.”
“My background in political management of multiple departments, the federal rule-making process, and the way the government works in general turned out helpful,” says Mudd about his tenure at the company.
THE HOUSING CRISIS
Mudd’s path at Fannie Mae took an unexpected turn in 2004 when the chairman of Fannie Mae, Franklin D. Raines ’71, as well as the chief financial officer, J. Timothy Howard, stepped down following an investigation of Fannie by the Securities and Exchange Commission.
Mudd was subsequently named interim CEO of Fannie, and later assumed the position of President and CEO in June 2005.
Speaking retrospectively about Fannie’s move towards riskier mortgage lending under his leadership, Mudd says he feels that he did the best he could with the situation that was thrust upon him after his predecessors’ sudden departure.
“I had to take a company that was in crisis when I took over and get it out of that crisis,” Mudd says.
But not long afterward, the full destructive potential of mass defaults on subprime mortgages gradually dawned on the financial world.
And when the federal government stepped in to become Fannie’s conservator in 2008, the company—much like many of the nation’s investment banks—found itself at the center of national attention.
Mudd was forced to step down in the process.
While some argue that Fannie Mae played a significant role in developing an unstable housing market, F.M. Scherer, HKS professor emeritus of public policy and corporate management, says he believes that Fannie Mae is not one of the institutions primarily responsible for the financial crisis.
“My impression is that Fannie Mae was a laggard, not a leader, in moving to the crisis,” Scherer says. “The key factor is that they joined the collateral debt obligations parade relatively late, and in joining, they contributed to it, but they were not the leaders.”
Despite many public critiques of his leadership at Fannie Mae, Mudd staunchly defends his actions.
“I feel that I did the best I could, that it wasn’t perfect, and I always dealt with that in a straightforward and honorable way.”
—Staff writer Kevin J. Wu can be reached at kwu@college.harvard.edu. —Staff writer Kevin Sun can be reached at ksun@college.harvard.edu.