American Capital director selected to chair Freddie Mac

The selection of John Koskinen to lead the seized mortgage giant brings to three the number of private equity pros asked this month to head up troubled financial services companies.

The US government on Thursday chose John Koskinen, a director with publicly traded private equity giant American Capital, to serve as board chairman of the Federal Home Loan Mortgage Corporation, better known as Freddie Mac. 

Koskinen’s hiring marked the third time this month the government has gone to the private equity well to find a senior executive to head up a large, troubled company affected by the raging global credit crisis. 

On Wednesday, the government picked Edward Liddy, an operating partner with buyout firm Clayton, Dubilier & Rice, to run battered US insurance giant American International Group (AIG). The selection of AIG’s chief executive was part of the government’s $85 billion (€60 billion) rescue plan for the company, which teetered on the edge of bankruptcy before the government intervened. Liddy replaced AIG chief executive Robert Willumstad. 

Koskinen will join another private equity executive, David Moffett, in Freddie’s senior management. The government earlier this month selected Moffett, a senior advisor with global private equity giant The Carlyle Group, as chief executive of the mortgage finance company. Moffett replaced former Freddie chief Richard Syron.

The government seized control of Freddie and the Federal National Mortgage Association, or Fannie Mae, on 7 September and ousted the directors and senior managers as an emergency measure to help the companies avoid crashing into bankruptcy.

According to a statement from American Capital, Koskinen will remain on the firm’s board, but will not participate in any of the firm’s investments involving Freddie Mac.

Koskinen has long experience turning around troubled companies. He was the president of The Palmieri Company, which restructured large companies. He is former chairman of the board of trustees of Duke University and served in the White House Office of Management and Budget under President Bill Clinton.

American Capital has $20 billion of capital resources under management and is the only private equity fund and the largest alternative asset management company in the S&P 500.