At 3 p.m. on Friday, September 5, as the Washington, D.C., region was bracing itself for Tropical Storm Hanna, Fannie Mae general counsel Beth Wilkinson was meeting with the country’s three most important financial regulators. Throughout the summer, Fannie Mae’s executives had met and held conference calls with the U.S. Department of the Treasury and the Federal Housing Finance Agency (FHFA) officials, discussing how to stem the crisis of confidence in the mortgage giant. But Wilkinson and Fannie Mae CEO Daniel Mudd only learned about the afternoon meeting that morning. They weren’t given an agenda. They were told simply to show up.
Now she and Mudd sat in a conference room in the 17th Street FHFA offices. Also present was Fannie Mae’s chairman, Stephen Ashley, and Fannie’s outside counsel, H. Rodgin Cohen of Sullivan & Cromwell. They listened to Treasury secretary Henry Paulson, Jr., Federal Reserve chairman Ben Bernanke, and Fannie’s chief regulator, FHFA director James Lockhart, outline a dramatic plan in which the government would take over Fannie Mae through a conservatorship.
