Winding down Fannie and Freddie could put minority careers at risk
Dialing back government support for District-based Fannie Mae and McLean-based Freddie Mac could have far-reaching implications for minority financial professionals in the Washington region.
Not only are the mortgage finance giants two of the largest employers in the area, with a total of 10,000 workers, but many of those positions are held by people of color. Were the government-sponsored entities (GSE) eliminated, as the Obama administration is proposing, that may leave thousands of these professionals looking for a place to land.
"The private financial industry has not historically been as open to minorities as the GSEs," said Anthony P. Carnevale, director of the Georgetown University Center on Education and the Workforce. "I don't know why we would expect the private sector to hire as aggressively, first of all locally and second of all in the minority community, as Fannie and Freddie have."
The mortgage twins are widely considered progressive in their hiring practices, routinely recognized by publications such as Black Enterprise and Working Mother for efforts to recruit and retain ethnic minorities and women. Both entities have especially been lauded for their continued commitment to these practices throughout the downturn.
Indeed, despite several rounds of layoffs at the companies in the past few years, they have largely maintained diverse staffs. At the close of last year, nearly 50 percent of Fannie's employees and 44 percent of those at Freddie were minorities.
"We've made employee cuts in several areas, but we have also increased in others. As such, the total employee figure has remained roughly the same throughout conservatorship," said Douglas Duvall, a spokesman for Freddie Mac. "We are constantly assessing our business to ensure that our personnel and resources match the needs of the marketplace."
The GSE's have been grooming grounds for many minority professionals in the financial service industry, who routinely have gone on to work at other capital markets institutions.
A question of timing
Fannie and Freddie are, in many ways, the lynchpins of the Washington area's burgeoning financial service sector, which has grown into a major hub for the secondary mortgage market, banking and asset management in recent years.
From 1999 to 2005, the Greater Washington Initiative estimates that the number of business and financial service workers in the area grew 5.2 percent, compared to the national average of 3.3 percent. The marketing and research arm of the Greater Washington Board of Trade predicts the region will need roughly 58,000 more of these types of workers to maintain the anticipated growth of the sector.
That could bode well for GSE employees if the companies are disbanded.
"People's experience in Fannie and Freddie, as the economy comes back, should translate into job opportunities elsewhere," Carnevale said. "But we're talking about job opportunities that will be available in 2015 or 2016, when most economists think hiring will be robust. Timing is of consequence here."
Steve Saah, director of permanent placement services in the District office of financial staffing firm Robert Half International, is already witnessing a 6 percent increase in the hiring of local finance professionals.