Whence your new chief executive? From inside? Or from outside?
This week’s change at the top of the two large U.S. mortgage agencies, Fannie Mae (nyse: FNM – news – people ) and Freddie Mac (nyse: FRE – news – people ), seems to confirm a management succession rule of thumb: Go inside for continuity, outside for change.
As part of being taken into government conservatory, Fannie Mae’s chief executive Daniel Mudd was replaced by Herbert Allison, former Merrill Lynch (nyse: MER – news – people ) banker who most recently has been running the pension fund TIA-CREFF (and, full disclosure, is a former director of Forbes.com). Freddie Mac’s Richard Syron was replaced by David Moffett, who resigned as a board member at the financial insurance guarantor MBIA (nyse: MBI – news – people ).
In one sense, these were atypical changes at the top; the decisions weren’t being taken by the companies’ boards, but by the U.S. Treasury secretary, who had been given power by Congress to backstop the two government-sponsored enterprises.
Exercising those powers this week was an extraordinary event, and in such circumstances, the government didn’t really have a choice but to replace the chief executives, says Scott Saslow, executive director at the Institute of Executive Development, a California-based leadership consulting firm. That only the heads of each company were axed underlines the symbolic nature of the acts.