WASHINGTON — The Treasury Department is moving closer to naming Fannie Mae chief executive Herbert M. Allison Jr. to run its financial recovery program, according to people familiar with the matter.
Allison, who has led Fannie Mae since the government seized the firm in September, for weeks has been a candidate to run the Troubled Assets Relief Program, the $700 billion federal initiative to stabilize banks, keep struggling borrowers in their homes and spur lending.
Other candidates for the post have dropped from contention.
“He will be asked by Obama,” said a financial-industry executive who discussed the nomination with Treasury officials and spoke on condition of anonymity.
If named to the Treasury, Allison would replace current TARP head Neel Kashkari, who stayed on from the Bush administration, becoming an influential figure under Treasury Secretary Timothy Geithner.
Allison, 65, has been close to Geithner for years. Allison served on an advisory committee to the Federal Reserve Bank of New York, of which Geithner was president. The new head of TARP would take over at a key moment. The largest 19 banks are undergoing “stress tests” by the government to see how much more in private or public capital they might need. Meanwhile, one program to spur lending backed by tens of billions in TARP funds is getting underway, and officials are putting the final touches on another, to remove troubled assets from banks’ balance sheets.
Allison would have a more influential role at the Treasury than at Fannie Mae. As head of the mortgage finance company, he answers to a board, which answers to a federal regulator, which in turn takes its cues largely from the Treasury.
