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Syron Saves Shares

Syron Saves SharesNewFreddie Mac CEO and Tufts graduate Richard Syron helps his companyget back to business. McLean,Va.

Medford/Somerville, Mass. [08.26.04] Richard Syron doesn’t mind a toughchallenge. The son of a maid and a Navy cook, the Tufts graduatehas climbed his way up from the tenements of Boston to the executivesuites at some of the country’s biggest banking firms. Syron’sspecialty: saving struggling companies. Now the new CEO at FreddieMac, he appears poised to add another success story to his resume.

The strugglingcompany brought in Syron – who earned his Ph.D. and master’sdegrees in Economics at Tufts - to help turn them around. Hisimpact was almost immediate.

“ ‘SteadyFreddie’ and Fannie Mae created the world’s best-capitalizedmortgage market. But Freddie’s success spawned the staggeringaccounting fraud that cost the top three executives their jobsin June 2003 for orchestrating a scheme to hide $5 billion inprofits for the years 2000, 2001 and 2002 so they could be trickedout in future years,” reported USA Today.

Accordingto the newspaper, “On the first trading day after the scandalerupted, Freddie Mac’s share price fell $9.38 a share, or16%. After Syron’s appointment as CEO, the stock has rebounded22%.”

But risingstock prices isn’t enough.

“[Syronsaid] We have made good progress at Freddie Mac so far this yearin improving our financial reporting and systems and in strengtheningour corporate governance, but we are not finished,” reportedForbes.

Now Syronplans to revolutionize Freddie Mac from the inside-out, aimingat what he calls its “inbred” and “isolated”culture. His focus will be on bringing audited financial statementsup to date and filing shareholder reports to the SEC by early2005, repairing congressional relationships and rebuilding credibilitywith 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 overfor Syron in 2008.

Korn/FerryCEO Windle Priem – responsible for Syron’s appointmentat Freddie Mac – told USA Today that Syron is uniquebecause he “puts his company before himself.”

“Mostof the guys that are CEOs have enormous egos,” Priem toldthe newspaper, “(Syron’s) not a big ego guy, but atthe same time, he’s a very forceful leader. At the end ofthe 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 amember of the Federal Reserve’s monetary policymaking OpenMarket Committee from 1989 to 1994, is well regarded by regulators.He is respected by investment bankers, too, having led the mergerof Amex with Nasdaq in 1999, and then in his next job as CEO ofThermo Electron, transforming a rambling, money-losing conglomerateinto a profitable company,” reported USA Today.

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

“Ona 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, describingone of Syron’s first jobs. “Scrambling to the rescue,Syron tied a length of rope around the chimney, the other endaround his cousin, and helped him to the ground.”

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

“There’sno nice, neat answer [to the question of proper reforms],”Syron told USA Today.

Under pressurefrom government leaders who want to increase regulations and oversightof government-sponsored companies like Freddie Mac, Syron is movingahead carefully.

“Firstof all, what we need is to make this more a fact-based discussion,rather than an emotional argument,” Syron told The BostonGlobe. “I am not saying there aren’t legitimatequestions that need to be debated, but the US does have the mosteffective mortgage system in the world, and you want to look carefullyat how you change it.”

The veryoutlook that gave Syron optimism while he was living in the tenementsof Boston may prove to be his biggest asset.

“Therewas this expectation – largely fulfilled – that thingswould be better than they are now,” he told USA Today.

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