By last fall, the heady days for mortgage giant Freddie Mac were over, and what was left for executives like David Kellermann were stressful days and long nights of picking up the pieces under the sharp scrutiny of regulators.
After taking the role of acting chief financial officer when the government seized control of the company in September, Kellermann worked for several weeks alongside federal regulators known as “shadows,” who stood by executives’ sides at all times, questioning their calls and turning them over for government approval.
Lately, the pressure seemed to be taking its toll. Neighbors said he’d lost weight. They began to suggest he should quit.
Kellermann was found dead in his basement this week in an apparent suicide, only a day after speaking to a human resource officer at the company and arranging to take time off because he’d been working such long hours. After seven months of trying to help the company emerge from financial disaster, some close to him wonder if it was just too much for Kellermann to try and pick up the pieces.
“If there was a reason it had to be the stress, the mounting stress and pressure of a company ... he worked so hard to help and resurrect and make good,” said David Gorder, a movie producer living in Hollywood Hills, Calif., who was a fraternity brother of Kellermann’s when they studied together at the University of Michigan. “Maybe he kept it inside too much.”
It can be mystery what makes people — even those seemingly successful — take their own lives. But Kellermann had clearly been under immense stress at Freddie Mac, which has dealt with an unceasing torrent of bad news that began six years ago, when an accounting scandal forced the resignation of two chief executives.
Kellermann, 41, had risen through the ranks at Freddie Mac since beginning there as an accountant 16 years ago. Gorder, who shared an apartment with him when he first started at the company, remembered how much he cherished the job.
“He loved Freddie Mac to no end,” Gorder said. “I never met anyone so dedicated ... to establish their career and excelling within the ranks of the company. He was enthralled with the work and being an accountant.”
After the government’s takeover last fall, morale at Freddie Mac sunk, employees watched their company stock holdings all but evaporate. Workers remain confused about what the Obama adminstration plans to do with Freddie Mac and sibling company Fannie Mae. Public outrage about retention bonuses and blame for the mortgage crisis also has taken its toll.
Freddie Mac, which owns or guarantees about 13 million mortgages, has been criticized for financing risky loans that fueled the real estate bubble and are now defaulting at a record pace. Last month, David Moffett, the government-appointed chief executive, resigned in frustration over strict oversight.
The pressure in jobs like Kellermann’s was inescapable.
Amid the crisis last fall, the government regulators known as “shadows” made themselves at home in the offices of Freddie Mac executives including Kellermann, a move that hamstrung their ability to do their jobs, recalled one former Freddie Mac manager and professional friend of Kellermann’s. The ex-manager spoke on condition of anonymity because he was not authorized to speak for the company.
Kellermann had near-daily evening meetings with Moffett, discussions that became a study in conflicting obligations, according to the former Freddie Mac manager.
Freddie Mac found itself caught between the policy goals of the government and the company’s duty to its shareholders, who have suffered staggering losses.
As acting CFO, he oversaw a staff of about 500 at Freddie Mac’s headquarters in McLean and had been working on the company’s first-quarter financial report, due by the end of May. But he’d also been embroiled recently in a dispute between Freddie and the Securities and Exchange Commission over its financial reports, according to a law enforcement official who spoke on condition of anonymity because the person was not authorized to discuss the case. Freddie is also the subject of a criminal probe by federal prosecutors in Virginia, though there are no indications that Kellermann was considered a target.
Freddie Mac lost more than $50 billion last year, and the Treasury Department has pumped in $45 billion to keep the company afloat.
“Freddie Mac was just a huge part of his life,” said Timothy Bittsberger, Freddie Mac’s former corporate treasurer, who kept in touch with Kellermann after Bittsberger left the company last fall. “It’s just unfortunate he had to deal with so many conflicting priorities which were unfairly and unnecessarily thrown upon him.”
Neighbors saw the strain on Kellermann. Some had even advised him to quit, but Kellermann responded that he wanted to help the company through its difficulties, which include mounting losses, several open positions and intense political pressure to stem foreclosures.
And there were other worries, too. Neighbors noticed a security detail showed up at his sprawling suburban home in the upscale Washington suburb of Vienna after executives at Freddie Mac faced intense criticism for deciding to pay retention bonuses. Kellermann was to receive $850,000 paid out in four installments. He had already received $170,000 in December.
The company acknowledged the stress Kellermann was facing on Tuesday, when Freddie Mac’s chief human resources officer asked him to take some time off because he’d been leaving work after 8 p.m. and sometimes, working at home for hours, said a person close to the company who spoke on condition of anonymity because the individual wasn’t authorized to discuss it publicly. Kellermann agreed to do so, and his work responsibilities would be given to two employees, the individual said.
He never came back. On Wednesday, authorities responding to a 911 call found his body in the home he shared with his wife and 5-year-old daughter.