Syron Saves Shares

New Freddie Mac CEO and Tufts graduate Richard Syron helps his company get back to business.

McLean, Va. [08.26.04] Richard Syron doesn’t mind a tough challenge. The son of a maid and a Navy cook, the Tufts graduate has climbed his way up from the tenements of Boston to the executive suites at some of the country’s biggest banking firms. Syron’s specialty: saving struggling companies. Now the new CEO at Freddie Mac, he appears poised to add another success story to his resume.

The struggling company brought in Syron – who earned his Ph.D. and master’s degrees in Economics at Tufts - to help turn them around. His impact was almost immediate.

“ ‘Steady Freddie’ and Fannie Mae created the world’s best-capitalized mortgage market. But Freddie’s success spawned the staggering accounting fraud that cost the top three executives their jobs in June 2003 for orchestrating a scheme to hide $5 billion in profits for the years 2000, 2001 and 2002 so they could be tricked out in future years,” reported USA Today.

According to the newspaper, “On the first trading day after the scandal erupted, Freddie Mac’s share price fell $9.38 a share, or 16%. After Syron’s appointment as CEO, the stock has rebounded 22%.”

But rising stock prices isn’t enough.

“[Syron said] We have made good progress at Freddie Mac so far this year in improving our financial reporting and systems and in strengthening our corporate governance, but we are not finished,” reported Forbes.

Now Syron plans to revolutionize Freddie Mac from the inside-out, aiming at what he calls its “inbred” and “isolated” culture. His focus will be on bringing audited financial statements up to date and filing shareholder reports to the SEC by early 2005, repairing congressional relationships and rebuilding credibility with regulators. To do so, Syron is building his own team– including former FleetBoston Financial president, Eugened McQuade, who serves as Freddie Mac’s president and will take over for Syron in 2008.

Korn/Ferry CEO Windle Priem – responsible for Syron’s appointment at Freddie Mac – told USA Today that Syron is unique because he “puts his company before himself.”

“Most of the guys that are CEOs have enormous egos,” Priem told the newspaper, “(Syron’s) not a big ego guy, but at the same time, he’s a very forceful leader. At the end of the day, he gets the job done.”

In many ways, that summarizes the Tufts graduate’s career.

“Syron, a former president of the Federal Reserve Bank of Boston and a member of the Federal Reserve’s monetary policymaking Open Market Committee from 1989 to 1994, is well regarded by regulators. He is respected by investment bankers, too, having led the merger of Amex with Nasdaq in 1999, and then in his next job as CEO of Thermo Electron, transforming a rambling, money-losing conglomerate into a profitable company,” reported USA Today.

Even as a young man, he was calm and decisive under pressure.

“On a TV antenna installation job atop one of Boston’s steep, slate rooftops, Syron says, his assistant, a heavyset cousin, froze with fear,” reported USA Today, describing one of Syron’s first jobs. “Scrambling to the rescue, Syron tied a length of rope around the chimney, the other end around his cousin, and helped him to the ground.”

The Tufts graduate still has a lot to do before his work “rescuing” Freddie Mac will be complete.

“There’s no nice, neat answer [to the question of proper reforms],” Syron told USA Today.

Under pressure from government leaders who want to increase regulations and oversight of government-sponsored companies like Freddie Mac, Syron is moving ahead carefully.

“First of all, what we need is to make this more a fact-based discussion, rather than an emotional argument,” Syron told The Boston Globe. “I am not saying there aren’t legitimate questions that need to be debated, but the US does have the most effective mortgage system in the world, and you want to look carefully at how you change it.”

The very outlook that gave Syron optimism while he was living in the tenements of Boston may prove to be his biggest asset.

“There was this expectation – largely fulfilled – that things would be better than they are now,” he told USA Today.