Daniel H. Mudd, who lost his job last year as CEO of mortgage giant Fannie Mae when the company’s fortunes went south, has landed on his feet.
Mudd, 50, will become CEO of Fortress Investment Group, a private-equity firm, next month. He was already a member of the board.
He succeeds Wesley R. Edens, a company co-founder. Edens and Peter L. Briger Jr., the company president and another co-founder of the firm, will serve as co-chairs of the board.
According to a filing with the Securities and Exchange Commission, Mudd will receive an annual base salary of $200,000 this year and next year.
He gets a $1.3 million bonus payable on his Aug. 11 start date. And he is eligible for a $1.8 million bonus for 2010.
Upon starting, Mudd also receives a grant of Fortress stock valued at $25 million and payable in eight annual installments and subject to certain restrictions.
The new job represents a remarkable recovery for Mudd, who once earned praise for restoring Fannie Mae’s fortunes but received widespread criticism for pushing the company deep into the risky subprime mortgage market.
Mudd, the son of newscaster Roger Mudd, joined Fannie Mae as vice chairman and chief operating officer in 2000.
He became interim CEO in 2004, succeeding Franklin Raines, who had stepped down in the wake of reports that the company had violated accounting rules to inflate its profits.
The next year, Mudd was named Fannie Mae’s CEO and president.
As recounted in The New York Times, Mudd soon found his company under pressure from Wall Street to buy more and more profitable, but risky, mortgage packages.
At the same time, Congress was asking Fannie Mae to increase its role in the affordable-housing market by taking on more loans that had been made to people with low incomes.
Given these pressures and what seemed to be an opportunity for increased profits, Fannie Mae assumed more and more risk, doing well until the mortgage bubble began to burst in 2007.
In September 2008, the U.S. government took over Fannie Mae and Mudd was forced to leave.
According to The Wall Street Journal, Mudd’s connection to Fortress grew out of relationships developed in the 1990s when he was an executive with GE Capital in Asia.
He worked on business deals with Briger, then a partner at Goldman Sachs Group Inc.
Fortress, which went public in 2007, has been battered by the economic downturn, its stock dropping 90 percent.
However, Edens has predicted the firm will rebound. “We are energized by the investment opportunities we see emerging over the next several years,” he said in a news release.
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