Reported Suicide Is Latest Shock at Freddie Mac

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By CHARLES DUHIGG and JACK HEALY

Published: April 22, 2009

The pressures were already immense when David B. Kellermann was promoted to the top financial position at the mortgage giant Freddie Mac last September. Then they got even worse.

Freddie Mac, via Reuters

David B. Kellermann was found at his home in Virginia.

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Back Story: Charles Duhigg on the Apparent Suicide of Freddie Mac's Finance Chief.

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Times Topics: Freddie Mac

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Doug Mills/The New York Times

Police on Wednesday outside the Vienna, Va., home where David B. Kellermann, the acting chief financial officer of Freddie Mac, was found dead.

Mr. Kellermann’s boss and other top executives were ousted when the Treasury secretary seized Freddie Mac and its sibling company, Fannie Mae; others left on their own and were not replaced. Soon President Obama told the companies they were responsible for carrying out some of his programs to revive the economy, in addition to keeping the housing market afloat by buying and selling hundreds of thousands of mortgages a month.

Mr. Kellermann, 41, began working nonstop, sometimes returning home only to change clothes, colleagues say. He was losing weight and telling friends that it seemed impossible to appease everyone — regulators, lawmakers, investors and other executives — given their competing demands. Someone was always angry with him, he told one friend. And no matter how many hours everyone worked, it seemed as if the economy and homeowners were still slipping farther into the abyss.

Then early this month, Mr. Kellermann and other executives at Freddie Mac and Fannie Mae became the focus of intense scrutiny when lawmakers learned they would receive bonuses totaling $210 million. Mr. Kellermann was set to receive $850,000 over 16 months. Reporters and camera crews showed up at his home in Vienna, an affluent Virginia suburb of Washington. Fearing that someone might attack his house, his wife or their 5-year-old daughter, he asked the company for a security detail.

Early on Wednesday, Mr. Kellermann went to the basement of his brick home and hanged himself, according to people familiar with the situation who were not authorized to speak. His body was removed five hours later, through a throng of neighbors, television crews and others.

His colleagues, some of whom learned of his death on the radio commuting to work, bought and sold about 8,500 mortgages that day, their frantic pace interrupted only by an 11 a.m. meeting for employees who wanted to share memories of a deceased friend.

“David was such an honest and humble person,” said Tim Bitsberger, Freddie Mac’s treasurer until he left in December. “He had an incredible commitment to this company and trying to get the economy back on track.”

“It just doesn’t make sense,” Mr. Bitsberger said.

The roots and causes of suicide are often unclear. It is not known if Mr. Kellermann succumbed to the pressures of his job. But in the aftermath of his death, it is plain that at Freddie Mac, as at many of the companies in the center of this economic storm, there are forces so strong they can overwhelm almost anyone.

At General Motors, executives are fighting to save a company that has cut their salaries and suspended their vacations. On Wall Street, professionals are demonized and then asked to work overtime to repair the damage colleagues have wrought. These professionals may not deserve tears, particularly compared to the millions of Americans who have lost their jobs and their homes. But Mr. Kellermann’s death is a reminder that those suffering in this crisis reside in every neighborhood, from the squalid to the opulent.

“The pressure right now is relentless,” said a Freddie Mac executive who spoke on condition of anonymity because he was not authorized to speak. “Everyone in the financial sector, regardless of where you work, is constantly told both that this is our fault, and that we have to work as hard as possible, otherwise the nation will fall apart.”

Mr. Kellermann, who spent more than 16 years at Freddie Mac and saw his stock and options decline precipitously last year, was at the intersection of some of the most difficult issues facing the company. Last month the company’s chief executive, David M. Moffett, resigned in part, he said, because federal regulators were using Freddie Mac to carry out economic policy at the expense of nursing the publicly held company back to financial health. The company has not had a president since 2007.

Freddie Mac and Fannie Mae, which together own or back more than half of the home mortgages in the country, have been hobbled by skyrocketing loan defaults and have received a total of $60 billion in federal aid since they were taken over last fall.

Mr. Kellermann was also working in a poisonous political atmosphere. In addition to taking criticism over the bonuses, he was recently involved in tense conversations with the company’s federal regulator over its routine financial disclosures, according to people close to those discussions who also spoke on condition of anonymity. Freddie Mac executives wanted to emphasize to investors that they believed the company was being run to benefit the government, rather than shareholders. The company’s regulator, the Federal Housing Finance Authority, had pushed to play down that language. Freddie Mac reported to the Securities and Exchange Commission that changes it had made in practices to help the government “have increased our expenses or caused us to forgo revenue opportunities.”

Mr. Kellermann was also required to certify Freddie Mac’s filings to the Securities and Exchange Commission. The company disclosed in March that there was a continuing federal investigation of its accounting, disclosure and corporate governance practices. That investigation is currently being overseen by the United States attorney’s office for the Eastern District of Virginia, which declined to comment. A spokesman, David Palombi, said Freddie Mac knew of no link between the death and the legal inquiries.

A spokeswoman for the Fairfax County Police Department in Virginia said there were no signs of foul play in Mr. Kellermann’s death. The police would not comment on whether a note had been found, but a spokesman said that nothing except the body had been removed from the house.

Stephen Labaton contributed reporting.