BLOG VIEW: A Reason To Howl

en Ginsberg began his landmark 1956 poem ‘Howl’ with these jolting words:[/b] ‘I have seen the best minds of my generation destroyed by madness.’ Those words came to mind when I noticed a New York Times article last week that detailed how Fannie Mae and Freddie Mac are experiencing severe personnel problems, to the point that senior and mid-level managers are leaving the government-sponsored enterprises (GSEs), while top level executive positions have been vacant for an embarrassingly long period of time. How bad is the human resources scene at the GSEs? The Times reported that Fannie Mae still needs to fill the openings for general counsel, chief risk officer and chief technology officer, while Freddie Mac has the "help wanted" sign hanging out for chief executive, a chief operating officer and a chief financial officer. Both GSEs are lacking senior vice presidents and other upper-management offices. At first, the news seemed very puzzling. After all, too many financial services professionals are currently without jobs – there is no lack of qualified talent to fill the GSE voids. But upon closer consideration, it is easy to see why many people would prefer not to work at Fannie or Freddie. For starters, the fate of the GSEs is still in doubt. The Obama administration has yet to put forth a game plan on how long Fannie and Freddie will remain under conservatorship and what will happen to them in the near future. Obviously, no one wants to take a job that may not be there next year. Furthermore, many people may not see a job at Fannie and Freddie as being financially rewarding. In the aftermath of the American International Group debacle, Fannie and Freddie were revealed to have their own retention bonus programs intact. This created a hue and cry in Washington, and James Lockhart, director of the Federal Housing Finance Agency (FHFA), sent a letter to Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, which stated, "I am writing to urge strongly that you rescind the retention bonus programs at Fannie Mae and Freddie Mac, prohibit any further payment of bonuses to executives under that program, and pursue repayment of any already-paid bonuses." For any financial services executive who came of age in an environment of bonus programs, this no-frills approach has very little appeal. Needless to say, there hasn't been a mad rush of job applicants inquiring about the Fannie and Freddie executive openings. The Washington elite, which has never been celebrated for its perspicacity, has recognized the gravity of the situation and is openly worried. The Times quoted Lockhart as saying, "Everybody is stretched very thin. The U.S. government probably has about $400 billion invested in these companies. If you lose these people, you jeopardize that investment. We're very worried, not only about the vacancies now, but also about future holes." If anything, this personnel problem calls out for a detailed explanation of what the Obama administration plans to do with the GSEs – the uncertainty over their fate is creating problems at many levels, not just on the human resources front. While no one seriously expects a quickie solution to the Fannie and Freddie plan, it would help if some idea was presented on how long it would take to bring the matter to a proper resolution. It is also incumbent upon the FHFA to actively recruit financial services professionals who can help steer Fannie and Freddie back to health. While retention bonuses are unwelcome in the current political environment, other ideas for attracting and retaining high-quality professionals need to be pursued with aggressive speed. Considering the current state of the secondary market, there isn't a moment to lose. At this crucial time, Fannie and Freddie need to attract the best minds in the industry. But if the best minds believe that GSE jobs are the occupational equivalent of madness, there will be plenty of painful howling in the months to come. – Phil Hall, editor, [b][i]Secondary Marketing Executive[/i][/b]. [i] (Please address all comments regarding this opinion column to hallp@sme-online.co

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