From the June 2007 issue of Treasury & Risk magazine

Freddie's Buddy

Buddy Piszel earned his stripes fixing troubled Health Net and helping take Prudential public. Can he repeat his successes at Freddie Mac?

In November, when Anthony "Buddy" Piszel became Freddie Mac's executive vice president and CFO, he was accustomed to scandals. As the former CFO of Health Net Inc., he helped to turn around the $12 billion managed healthcare provider after a billing crisis.

If he could fix the financials of a troubled company in an industry struggling with heavy regulation and unpaid receivables, Freddie Mac reckoned he was just the man to help the government-sponsored mortgage guarantor emerge from an accounting scandal that forced it to upwardly restate more than $5 billion in annual earnings.

As Piszel sees it, the Freddie Mac debacle is a lesson in misplaced emphasis. The company, he says, tried to speed up accounting while simultaneously replacing accounting controls. "Our firm overemphasized front-office activities and underemphasized back-office functions," says Piszel. "We grew like a weed and then exploded."

Although his predecessor Martin Baumann laid some seeds for recovery, it's Piszel's job to make sure the company--with its $1.89 trillion mortgage and securitization portfolio--makes good on a promise to register Freddie Mac shares with the SEC. As senior vice president, controller and principal accounting officer at Prudential Financial Inc. in 2001, he helped bring the firm public.

Piszel is humble about his Freddie Mac experience. "A lot of good work was far along when I came on board," he says. "I'm modifying it around the edges." So far, so good. Piszel expects to release timely--and correct--quarterly reports by 2008, bring antiquated accounting and record-keeping systems up-to-date, and continue to cut back on the derivatives investments that caused the trouble. Between bringing on new systems, recalibrating goals and redeploying staff, Piszel predicts he can slash 20 days off reporting time. But that may be just the beginning of Piszel's challenges. To bring the company public will also mean passing a Sarbanes-Oxley 404 internal controls audit and signing a 302 certification.

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