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© Reuters. FILE PHOTO: File photo shows the headquarters of mortgage lender Freddie Mac in McLeanBy Michelle Price and Lauren Tara LaCapra
WASHINGTON (Reuters) – Freddie Mac has offered early retirement to around 25% of its staff as it begins to overhaul its workforce amid a broader push by the Trump administration to reform the housing finance giant, according to four people briefed on the matter.
The company has offered the packages to 1,650 eligible employees, although it expects around one quarter or just over 6% of its workforce to take the buyout, one of the people said.
Two of the sources briefed on the matter said that the early retirement program had been communicated to all staff. Reuters could not ascertain how many people had so far taken the buyout.
“As is common in many American companies, Freddie Mac is offering employees who meet certain age and tenure requirements a voluntary opportunity to retire early. As we prepare for our next chapter, we anticipate this will help realign our workforce to create a company attractive to outside investors as well as current and future employees,” a spokesman for Freddie Mac said in an email statement.
Freddie and its fellow government-sponsored enterprise Fannie Mae were bailed out in 2008 during the subprime mortgage crisis. In September, the Trump administration unveiled a long-awaited blueprint to remove the pair – which guarantee over half of the nation’s mortgages – from government control in coming years.
That plan, led by the U.S. Treasury Department and Fannie and Freddie’s regulator the Federal Housing Finance Agency (FHFA), calls in the meantime for the pair to shrink their business footprint, review their operations, and rebuild their capital reserves.
In November, Reuters reported that Freddie had hired management consultancy McKinsey & Company to advise on its capital management plan. The mortgage giant has also discussed its strategy, including potentially cutting headcount, with other outside consulting firms, according to a fifth person involved in those discussions.
The company’s staffing levels have grown by around a third during its conservatorship, under which the majority of its profits, until recently, have been passed to the Treasury.
As of February 2019, Freddie Mac had 6,600 full-time and 42 part-time employees, compared with 4,927 full-time and 85 part-time employees in March 2009, according to regulatory filings.
In October, Mark Calabria, director of the FHFA, told reporters that he had asked Fannie and Freddie to come up with a plan to boost their return on equity, adding the pair could “can definitely cut expenses,” without specifying how.
A spokesman for FHFA declined to comment on Freddie Mac’s staffing plans.
Graphic: How Fannie Mae and Freddie Mac work – https://graphics.reuters.com/USA-HOUSING-FANNIEFREDDIE/0100B24M0ZB/fanniefreddie.jpg
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