At 5 p.m. the trading floor at Federal National Mortgage Association is transformed. The yellow and green numbers flashing on computer screens suddenly freeze. The phones stop ringing. And at trader Kathy Jenkins's desk, there's a small party. Red licorice, jelly nougat and salt-water taffy pass from trader to trader as Jenkins and her colleagues discuss the day's ups and downs.
Such collegiality and cooperation, unusual for traders, extends to most aspects of the trading floor at Fannie Mae's Wisconsin Avenue headquarters. Even though Jenkins and Fannie Mae's three other traders are but a speed-dial away from New York's frantic trading pits, Fannie Mae's version of trading seems completely different.
Unlike most Wall Street trading desks, Fannie Mae's desk is not fundamentally a profit-making venture. The desk's unusual atmosphere comes from its customer service orientation as part of Fannie Mae's marketing department. Most of the desk's customers are small and mid-sized banks and savings and loans that do business with Fannie Mae in other areas, so that their trading is only one part of a bigger relationship.
"We cover our costs. We're not a profit center. In the company we're not evaluated on profits," said Charles Foster, head of trading for the desk. "We're truly an arm of the marketing department. Our goal is to give efficient market access."
By that, Foster refers to the trading desk's role in Fannie Mae's overall mission: making funds readily available to mortgage lenders, who in turn are able to make loans to people buying homes. The trading desk's role in that process includes buying "mortgage-backed securities" -- bonds backed by pools of mortgages with similar characteristics -- from banks, S&Ls and other lenders, which then have more cash to provide to potential home buyers. Last year the Fannie Mae trading desk bought about $8 billion in newly issued mortgage-backed securities.
Although the trading desk faces competition from Wall Street, it attracts customers who are already comfortable doing mortgage-related business with Fannie Mae, Foster said. "There is a whole strata of lenders out there that are doing business with us because we know the whole process from beginning to end," he said.
The trading desk also benefits Fannie Mae in other ways. Besides providing good customer relations, the desk test-markets new products and provides feedback to management on how Fannie Mae securities are trading on the market. In addition, the desk encourages lenders to trade in Fannie Mae securities instead of competing securities.
With an average trade size of $700,000, according to Foster, the desk deals with customers on a different level than Wall Street, where trades range from $2 to $20 million. "We exist to diversify the customer base, said Foster. "Since we're not market driven but product driven, we will take the time to deal with" smaller lenders.
The desk's customer service focus attracts traders like Jenkins, 31, who sought the thrill of trading without the hassles of living in New York. A Washington native who attended the University of Maryland, Jenkins has traded mortgage-backed securities at Fannie Mae for two years. Last year, more than $1 billion worth of securities passed through her hands.
"Here, it's never boring," said Jenkins from her desk on Fannie Mae's trading floor. She faces about five computer screens with columns of flashing yellow and green numbers and a huge phone with 25 speed-dial buttons. "I need a job that can keep me stimulated all day because I'm a little on the hyper side," Jenkins said.
Jenkins's job is to be part salesman, part trader. She deals personally with her 100 active clients in her designated region, the Midwest, persuading them to trade securities and advising them on market conditions. She also has direct access to traders on the floors of the New York investment firms, with whom she trades mortgage-backed securities.
A typical day for Jenkins begins with a morning strategy meeting, where department heads discuss pricing. By 9 a.m., the trading floor kicks into action and she works the phones as she watches the markets move.
With the large number of clients she handles and the country's difficult banking conditions, Jenkins expects a certain amount of turnover. The nation's savings and loan crisis has definitely affected her business; as part of her routine, she returns a call from an Illinois thrift that Fannie Mae didn't want to do business with because its financial condition was too weak.
"I'm waiting for it to work things out," she said. "I run into a lot of thrifts with financial problems, and I'm more or less just treading softly with them. We do trades forward 60 to 90 days, so a lot can happen."
Sensing a lull in the trading, Jenkins runs down to the cafeteria to grab a lunch of spinach quiche, cream of broccoli soup and a salad. She eats at her desk so as not to miss a phone call. The pace of her days varies widely, depending on market conditions.
"Some days it's wild, and some days it's like dialing for dollars," Jenkins said.
Wall Street also looms in the background, in its ability to attract the bigger clients. Later in the day, a client for whom Jenkins was seeking bids finds a better offer from a New York firm.
Jenkins appears disappointed whenever she loses a trade to a major Wall Street firm. Even Fannie Mae's customer service focus cannot erase a trader's love of closing a big deal.
"I went through a phase where I really wanted to go back to school. I wanted to be a nurse," Jenkins said. "Then I made a $50 million trade."