December 22, 2024

Herbert M. Allison Jr. Dies at 69; Led Bailout Efforts

The death was confirmed by his son Andrew, who said the cause was possibly a heart attack.

Mr. Allison, a political appointee of both President Obama and President George W. Bush, was put in charge of Fannie Mae in 2008 as part of the Bush administration’s effort to rescue it and its sister company, Freddie Mac. The two companies, both government-sponsored, are the nation’s largest mortgage finance entities, created during the Depression to help make mortgages more affordable for homeowners.

The bailout of the companies, engineered by the Treasury secretary, Henry M. Paulson Jr., was one of the most extraordinary and expensive federal interventions in American history, totaling about $180 billion. By taking over the companies and replacing their managements, the administration sought to calm Wall Street concerns that these “too big to fail” institutions would go under and take the rest of the housing market — as well as the entire economy — with them.

Mr. Allison, who at the time had only recently retired as chairman and chief executive of TIAA-CREF, the giant financial services company, replaced Daniel H. Mudd at Fannie Mae after Fannie suffered a staggering $29 billion third-quarter loss in 2008. The losses almost wiped out shareholders entirely as housing prices plummeted, leaving millions of homeowners struggling to pay mortgages that were often larger than the value of their homes. Five years later the government still controls Fannie and Freddie, which are now profitable.

After President Obama took office in 2009, he appointed Mr. Allison to the Treasury Department as assistant secretary for financial stability. Mr. Allison had supported Mr. Obama’s 2008 presidential run, even though two election cycles earlier he had run the finance committee for Senator John McCain’s 2000 presidential campaign.

As assistant secretary, Mr. Allison helped oversee the Troubled Asset Relief Program, or TARP, the banking industry bailout also created under the Bush administration and endorsed by Mr. Obama. Mr. Allison left the Treasury Department in September 2010, and about a year later the White House appointed him to conduct an independent review of government loans to energy companies after the bankruptcy of Solyndra, a solar panel company that had received government financing under the Obama administration.

In a statement on Monday night, Timothy F. Geithner, the former Treasury secretary, described Mr. Allison as “both a C.E.O. and a statesman, who served his country at a time of peril, bringing financial expertise and commercial judgment to the challenge of saving the American economy from a failing financial system.”

Herbert Monroe Allison Jr. was born on Aug. 2, 1943, in Pittsburgh and grew up on Long Island in Garden City. His father worked for the F.B.I.

Mr. Allison earned a bachelor’s degree in philosophy from Yale before earning his master’s degree in business at Stanford.

“People used to say that working for Herb was like getting an M.B.A. from Harvard,” said Steve Goldstein, who was executive vice president under Mr. Allison at TIAA-CREF, “but he’d correct them and say, ‘No, it’s like getting an M.B.A. from Stanford.’ ”

Mr. Allison also served in the Navy as an officer for four years, one of them based in Nha Trang during the war in Vietnam.

He began his financial services career at Merrill and remained with it for 28 years, working his way up to president, chief operating officer and member of the board. While at Merrill, he helped coordinate the group of banks that bailed out the hedge fund Long-Term Capital Management in 1998. That same year he oversaw large layoffs after a period of turmoil in the markets. He left in 1999 amid a leadership shake-up.

After joining TIAA-CREF (which stands for Teachers Insurance and Annuity Association-College Retirement Equities Fund), Mr. Allison oversaw its downsizing, laying off 500 of its employees, or about 8 percent of the work force. Employees called the dismissals “Herbicides.”

Mr. Allison was also the founder of a start-up called the Alliance for Lifelong Learning, a joint venture with several universities; a director of Time Warner; and a member of advisory panels at the Yale School of Management, the Stanford Graduate School of Business and the Federal Reserve Bank of New York. He was a director of the New York Stock Exchange from 2003 through 2005.

Mr. Allison wrote a book about the financial crisis in 2011, “The Megabanks Mess,” in which he argued that the nation’s largest banks should be broken up. He was working on another book at his death, his family said.

Besides his son Andrew, Mr. Allison is survived by his wife, the former Simin Nazemi; another son, John, and a younger brother, George.

Mr. Allison met his wife in Tehran, where he was working for Merrill at the time and she was a secretary to a bank managing director. Before the two could marry, however, her father insisted that Mr. Allison first learn some Persian, his son Andrew said. So Mr. Allison did, building a vocabulary of 1,000 Persian words over two weeks by reading them from flashcards.

Article source: http://www.nytimes.com/2013/07/16/business/herbert-m-allison-jr-former-merrill-president-dies-at-69.html?partner=rss&emc=rss