At Freddie Mac, Chief Discarded Warning Signs
But Mr. Syron was more resistant. Freddie Mac raised $6 billion in preferred stock last year, but at a March conference in New York, Mr. Syron combatively dismissed suggestions he would raise more simply because officials told him to.
“This company will bow to no one,” Mr. Syron told a room of investors and analysts. Despite promises, the company has delayed a planned $5.5 billion stock sale. Because of that delay, the effective cost of raising funds has skyrocketed as the company’s share price has declined.
In a statement, Freddie Mac said Mr. Syron’s March comments focused on dilutive capital raising and that the stock sale was delayed because lawyers said it could not occur while the company was registering with the Securities and Exchange Commission. That process was finalized last month.
In 2007, as home prices were falling and defaults rising in some areas, people at both firms urged their chief executives to scale back on mortgage purchases. Fannie Mae shrunk its mortgage portfolio slightly.
Mr. Syron’s Freddie Mac, however, increased its portfolio by $17 billion.
That same year the companies posted combined losses of $5.2 billion. This year, they have announced losses of $2.4 billion, and analysts say they may lose an additional $24 billion or more.
Last month, after weeks of rumors and bad news, investors began dumping the companies’ shares, driving their stock prices down almost 60 percent apiece. The selling did not subside until Mr. Paulson unveiled a rescue plan with powers to inject billions of taxpayer dollars into the companies. That plan has not been activated, but the law, signed by President Bush last week, also gives the government sweeping new regulatory control over the firms.
“It basically worked exactly as everyone expected — when things got bad, the government came to the rescue,” said a second former high-ranking Freddie Mac executive. “But we didn’t expect it would come at the cost of a new regulator who now has the power to burrow into our business forever.”
In the last three weeks, the companies’ stock prices have recovered a small portion of their losses. Executives, however, remain concerned that more bad news could spark another panic.
Freddie Mac will report its second-quarter financial results Wednesday. Fannie Mae will release its results on Friday.
“I’ve had four other jobs as C.E.O., and I came out of them all pretty well,” Mr. Syron said. “What I’m working for right now is to save my reputation.”