Jim Johnson has been the chairman of Fannie Mae for exactly five years. During that time, Fannie has become the nation's largest financial corporation, holding $317 billion in assets, up 132% since 1990.
Its growth has not only been rapid but steady and consistent during a period when the lenders that supply Fannie Mae with its mortgages were alternately enriched and devastated by volatility in interest rates.
Mr. Johnson is now staking his reputation on Fannie Mae's commitment to finance - by 2001, the agency intends to lend $1 trillion in mortgages to some 10 million households that need special help. This social mission demands that he not only survive the political sea change that has swept Washington, but continue to deliver a generous return to shareholders.
In Mr. Johnson's view, he has spent the past five years preparing for the big commitment. "The David Maxwell decade was a decade of survival," he said in a recent interview, referring to his predecessor as chairman of Fannie Mae. "I had five obligations or goals to guide me when I took the job."
His punch list: a legislative and regulatory program; enhancement of Fannie's capabilities to meet its housing commitment; facing up to the need to make "a quantum leap" in technology; selecting his own management team; and improving the effectiveness and diversity of Fannie's own employees.
The $1 trillion program, now two years old, is the driving force in Mr. Johnson's vision for Fannie Mae. It aims to facilitate financing for low- income groups, immigrants, and other people who might otherwise lack access to homeownership.
He says the program is slightly behind its dollar target after two years of weakness in the mortgage market. But he says the machinery needed to deliver on his promise is now fully in place, and he expects to be ahead of schedule by the end of this year as the market rebounds.
"We have built the machine to do what we said we would do," he commented. "And it's already on the road."
Given his five-year track record, Mr. Johnson could be forgiven for gloating. Yet James A. Johnson, born in 1945 on a farm in Benson, Minn., remains an open, plain-speaking, down home kind of executive, whose views of Fannie's corporate and social missions seem as straight as the sight lines on the Minnesota plains where he grew up.
No business-school number-cruncher, Mr. Johnson's academic background and early career were in public affairs and in Democratic politics as an aide to Sen. Walter Mondale, another Minnesotan. He also spent time in the White House during Mr. Mondale's tenure as Vice President.
Yet people who know him well say Mr. Johnson is an ideal fit for the Fannie Mae role. "He has the perfect amalgam of skills and experience for his job," said Richard Parsons, chairman of Time Warner Inc. and a member of Fannie Mae's board. "He's more subdued than some - and smarter than most."
Mr. Parsons said Mr. Johnson has assembled "one of the strongest management teams in corporate America," a theme echoed by other executives.
Probably the biggest job at Fannie Mae is risk management, and observers agree that political risk is the No. 1 pothole around which the company must maneuver. In this context, Mr. Johnson is a also a good fit after his years at the nerve center of the Washington scene and his skill at forming alliances.
Felix Beck, former chairman of Margaretten Financial Corp. and Chemical Residential Mortgage Corp. and a long-time Fannie board member, says of Mr. Johnson, "He seems to have friends across party lines. There's no distinction that I can find."
It seems that everybody who knows Mr. Johnson is laudatory about his personal abilities. Some say that, like any passionate leader, he has his occasional outbursts of temper. One mortgage lobbyist, recounting a run-in with the Fannie Mae chief, says with a laugh, "You're nobody until you've had your tie pulled by Jim Johnson."
While Mr. Johnson has rarely been the target of public personal attacks, his efforts at Fannie Mae have not been immune to criticism.
For example, his pet project, the $1 trillion commitment, has been greeted with skepticism in some quarters. Leland Brendsel, chairman of Fannie's rival Freddie Mac, even publicly dismissed the program as hype. But Mr. Johnson, in a recent interview, said, "Anyone who would say this is not a serious program is not a serious person."
But he and his colleagues have clearly been galled by the skepticism, all the more so because they see themselves as the good guys fighting the good fight.
Mr. Johnson concedes that the drama of the $1 trillion figure appealed to him, and that he thought it was exactly what was necessary to get both its public constituencies and the Fannie Mae staff to take the program seriously.
And indeed, it may have turned into a potent political tool. Asked about the impact of the Republican ascendancy in Washington, he said, "I believe we have more support among legislators and political leaders than ever." he said. He explained that Fannie's outreach efforts in the form of regional partnership offices have won grass roots support from mayors and governors across the country.
But by Mr. Johnson's account, the impact on Fannie Mae's staff has been the most important of all. He says compensation packages are all keyed to how well each executive has met goals related to the $1 trillion commitment.
Indeed, Mr. Beck suggests that maintaining profitability may be the biggest business issue facing Fannie Mae. "Fannie Mae has attractive returns on equity, and the challenge is to keep meeting and beating goals, which gets increasingly difficult as you get bigger."
But he believes that Mr. Johnson is equal to the task. "He has gone through an enormous period in which the company continues to break records. He has proved that it is not just a cyclical company and that it can do well in all markets."
If the massive commitment is met, some analysts suggest it could mean a shift in Fannie Mae's product mix that might carry a higher risk profile.
But Mr. Johnson doesn't buy this scenario. "When I looked at our outreach activities, part of what I started realizing is that there are millions who are well qualified to own homes but don't own homes and want to," he said. Loan-to-value ratios are not likely to rise significantly from where they are currently, he added.
"The summary is, we can continue to grow at a double-digit rate, with more aggressive management in part, and through pricing," he said.
Mr. Johnson gets total compensation of almost $4 million a year, not bad for a farm boy. And if he pulls off another five years of double-digit growth while meeting a huge social commitment, he will be worth every penny.
