Fannie, Freddie: Lights Are On, But No One's Home

This post first appeared on Minyanville.

Who knew that working for a quasi-nationalized bureaucratic nightmare -- with the added bonus of becoming a national scapegoat -- was such a lousy gig?

At Fannie Mae (FNM) and Freddie Mac (FRE), high-level employees are leaving in droves, and replacements are proving to be few and far between. According to the New York Times, candidates are turned off by heavy scrutiny and the burden of having to answer to over 300 million taxpayer-shareholders.

Fannie is on the market for a general counsel, chief risk officer and chief technology officer; Freddie, on the other hand, is truly a rudderless ship, currently managing a cool $6 trillion in mortgages without a chief executive officer, chief financial officer or chief operating officer.

The Obama Administration faces an ongoing challenge: Finding knowledgeable financial professionals willing to take on the truly thankless job of cleaning up after the orgy of financial greed and excess of the last 2 decades.

Treasury Secretary Tim Geithner, working with a skeleton crew, is suffering delays in implementing key initiatives. Neel Kashkari, former President Bush’s choice to head up the Treasury’s financial rescue plan, is stepping down as soon as a suitable replacement can be found. Ironically, President Obama’s top choice is Herbert Allison Jr., who's currently running Fannie Mae.

James Lockhart, director of the Federal Housing Finance Agency, the group overseeing Fannie and Freddie, is concerned about his staff: “Everybody is stretched very thin. We’re very worried, not only about the vacancies now, but also about future holes,” which could impact risk management, technology and limit the firms’ ability to implement aggressive loan-modification plans.

And after the unabashed fury hurled at American International Group (AIG) chief Ed Liddy just weeks ago, it’s no wonder Wall Street’s top brass isn’t jumping at the chance to get aboard the sinking ships that are Fannie Mae and Freddie Mac.

Such is the problem with a centrally planned economy. Corporate chieftains may be brash, offensive or downright mean, but managing hundreds of thousands of employees is no simple task. Being a CEO isn't for the faint at heart, and few executives in the country -- or the world, for that matter -- are up to the task.

To be sure, the system as it stood as of early 2006 was far from perfect. But to expect that government -- with an aptitude for incompetence that more than surpasses that of the private sector -- will do much better is downright foolish.

Aren't politicians supposed to work for us, not the other way around?