Thursday, April 23, 2009

Kellermann asked for time-off Tuesday night; "suicide" on Wednesday

Freddie Mac Executive Had Taken Week Off to Deal With Stress

Firm's Finance Chief Dead in Apparent Suicide

By Zachary A. Goldfarb and Jonathan Mummolo

Washington Post Staff Writers
Thursday, April 23, 2009 12:33 PM

David B. Kellermann, the Freddie Mac executive who was found dead yesterday in an apparent suicide, discussed taking time off with the company's human relations department on Tuesday, according to a person familiar with the matter.

Kellermann, a longtime employee of the troubled mortgage giant who had been acting chief financial officer since a government takeover in September, told officials he was feeling stressed, working long hours, and he needed to take a break, the person said.

Freddie Mac assured Kellermann he could take a week off, effective immediately, and his subordinates could run the finance operation without interruption. On Tuesday night, Kellermann apparently decided to take the vacation and delegated responsibilities to two senior members of his staff, the person said.

Found by his wife Donna before dawn yesterday in the basement of his Fairfax County home, Kellermann, 41, left no note, law enforcement sources said.

He had hanged himself on a piece of exercise equipment, the sources said. There were no signs of foul play. His body was taken to the office of the medical examiner, who will rule on the cause of death. His motivations are not known.

But even if his final act was unrelated to work, Kellermann's last months were consumed by the mounting stresses at the center of the financial crisis. People who knew him said he was deeply committed to Freddie Mac, just about the only place he'd worked professionally, and its struggles had taken an increasingly visible toll.

"David was engaged in all parts of the company," said Moffett, who tapped Kellermann as his chief financial officer before resigning the top post last month. "The CFO of any company in today's environment is a very stressful job . . . particularly when you're in a company that's undergoing a tremendous amount of change and uncertainty."

Kellermann had worked his way up at Freddie Mac from a young financial analyst to one of the mortgage giant's main points of contact with its government overseers. Recently, he'd faced intense pressures dealing with the company's billions of dollars in losses and myriad other accounting and legal issues, refusing to take time off, his colleagues said.

"He endured a tremendous amount of stress over the years . . . It's been a difficult environment," said Peter Federico, Freddie Mac's treasurer and a close friend. The news of Kellermann's death yesterday stunned his colleagues. "It's one of the things that puts everything in perspective. It's difficult for everybody to deal with it," Federico said.

In the months before he died, Kellermann would trek most evenings to Freddie Mac's executive suite to see his boss. Long after other employees had headed home from the McLean campus, Kellermann would remain cloistered with chief executive David Moffett, wrestling for hours with the difficulties of a company that had been near collapse.

Kellermann usually brought a three-page list of to-do items. Moffett was new to the company, appointed by the government after it seized Freddie Mac in September, and he recalled leaning heavily on Kellermann's 16 years of experience at the firm for guidance.

Freddie Mac was seized in September after the Treasury Department and Federal Housing Finance Agency determined that mounting losses at the firm and its sister, Fannie Mae, posed a risk to the entire financial system. Losses at Freddie Mac have been particularly steep, and together the two companies have received nearly $60 billion from the government to shore up their financial health.

Once a high-flying finance company, Freddie Mac has been transformed into a quasi-government agency, carrying out big parts of the Obama administration's housing recovery plan. Employees at Freddie Mac lost much of their wealth with the collapse of the company's stock and face uncertain job prospects long term.

Kellermann was responsible for the company's financial controls, financial reporting, taxes, capital oversight and compliance with federal requirements. He was previously senior vice president, corporate controller and principal accounting officer after starting at the company as an analyst.

Even with all the financial losses at Freddie Mac, Kellermann continued to find lighter moments. In the weeks after the company was seized by the government, his grim presentations at Tuesday morning meetings of senior executives would often end with him cracking jokes, colleagues said.

"He will be most remembered for his affability, his personal warmth, his sense of humor and his quick wit," said John A. Koskinen, the company's chief executive.

Yet Kellermann has also figured in recent controversies at Freddie Mac. He and a group of company attorneys tussled with its regulator in early March as the firm prepared to file its quarterly earnings report with the Securities and Exchange Commission. The group insisted that Freddie Mac inform shareholders of the cost to the company of helping carry out the Obama administration's housing recovery plan. The regulator urged the company not to do so, according to several sources familiar with the matter. An FHFA official contested that account, saying the regulator did not oppose disclosure but how the information was portrayed in the filing.

Freddie Mac ultimately disclosed the material.

Separately, the SEC and Justice Department have been investigating Freddie Mac over questions of accounting, disclosure and corporate governance, the company said in a recent SEC filing. Sources said Kellermann was not a target of the probe by the U.S. Attorney's office in Alexandria but was someone investigators wanted to question. "He obviously knew about things that we would want to know about,'' said one law enforcement source, who was not authorized to comment and spoke on condition of anonymity.

David R. Palombi, a company spokesman, said that Freddie Mac "knows of no connection between this terrible personal tragedy and the ongoing inquiries that are discussed in our recent SEC filings."

Earlier this month, Freddie Mac and Fannie Mae were criticized on Capitol Hill after outlining plans to pay $210 million in retention bonuses to 7,600 employees over 18 months. Those payments included an $850,000 bonus for Kellermann disbursed over a year and a half. He had already received $170,000. Top lawmakers have demanded that employees pay back money they've received and that the companies suspend all bonuses.

During the uproar over bonuses, Kellermann's wife sent an e-mail to neighbors letting them know that a security detail was guarding the house, one recalled. Another neighbor said the Kellermanns hadn't wanted the protection -- they were reluctant to see Freddie's troubles intrude so publicly on their private lives.

Soon after Kellermann's death was reported yesterday, television trucks pulled up outside his stately brick home and its manicured lawn, beaming the image around the world. Many neighbors were taken aback by the attention given to the apparent suicide.

Susan Unger, a neighbor, said she last saw him a few weeks ago working in his yard. She woke up early yesterday morning to the sound of rescue crews arriving. "They took the stretcher in and brought it out empty, so I thought everything was okay," Unger said. "It's just so sad. . . . I'm just in total shock."

The neighbors knew Kellermann mostly as a doting father of a young daughter and meticulous gardener. He decorated his home lavishly for Christmas and threw great parties for Halloween and University of Michigan football games. He'd attended Michigan before receiving a graduate degree from George Washington University.

But Sergio Moreno, who lives up the street, said he had recently noticed some changes. Kellermann was busier than ever and more stressed. A large man, Kellermann had lost a lot of weight.