Freddie Mac’s New Compliance Chief on Lessons Learned From Previous Crises

Freddie Mac has named Jerry Mauricio as its senior vice president and chief compliance officer, an appointment coming as the mortgage giant looks to become free of government conservatorship after more than 12 years.

McLean, Va.-based Freddie Mac, which backs mortgage loans, was effectively nationalized during the 2008 housing crisis and is facing the latest setback to its quest to exit government control after the Biden administration ousted Mark Calabria as director of the Federal Housing Finance Agency. He had given priority to returning Freddie Mac to private hands. The Biden administration has signaled it isn’t in a hurry to privatize Freddie Mac or Fannie Mae.

Mr. Mauricio, who had been serving as the interim CCO of Freddie Mac since January, started his official role last month. He oversees Freddie Mac’s compliance risk management program for its regulatory and conservatorship obligations. He manages about 45 people in the compliance department and is looking to grow the team, he said in an interview. He reports directly to Freddie Mac’s chief executive.

Before joining Freddie Mac in 2019, Mr. Mauricio served as CCO at broker-dealer Capital One Investing LLC. He has also worked in compliance at other financial institutions, including BNP Paribas SA, Barclays Capital Inc. and Lehman Brothers.

The Wall Street Journal spoke with Mr. Mauricio about his experience working in compliance and what he has learned through previous crises. Edited excerpts follow.

WSJ: You spent some of the early years of your career at Lehman Brothers. How does that experience help you navigate the Covid-19 pandemic?

Mr. Mauricio: I started [at Lehman Brothers] in 1999 and then I was there to the very end. During the 2001 9/11 terrorist attack, I almost lost my life, four times that day, but then having to survive, get back on our feet, get the firm back on our feet…the lessons learned from the pain of experiencing those types of horrible events is that we, as human beings, [are] very resilient. You see communities come together, people come together to help one another. I was at the Lehman Brothers ground zero financial crisis in 2008, when the firm failed, and those same themes prevail.

While I would never want to experience those types of events again, it teaches you that everything will be OK. You’ll learn here because of those elements of people coming together helping one another, those skills, how to prioritize, what to focus on, when things are being triaged. It’s interesting because I would never have thought I would live through a pandemic. I thought 9/11 and the collapse of Lehman Brothers during 2008 was sufficient from a personal experience. I’m not making light of the pandemic, [it is a] very serious crisis, but that drives home that those experiences really helped me navigate how we manage through the pandemic.

At Lehman Brothers, after we got back on our feet, we really employed the video technology early on in the mid-2000s. And the whole having a camera, seeing the visuals of my team across the globe, looking for those facial cues and clues in terms of, ‘are people being responsive to the kind of the messaging?’ I got used to that very early on in my career working at these global organizations. So it makes working during Covid almost like second nature now, using Teams or Zoom.

WSJ: What are some of your priorities as the CCO?

Mr. Mauricio: Just to start off with managing compliance risk, making sure that we manage it within Freddie’s enterprise risk management framework…[I want to make] sure that not just compliance is managing the risks, but everyone in our organization takes the responsibility of compliance and executes on it.

WSJ: What’s the role of a CCO in ensuring compliance with the Fair Housing Act that prohibits discrimination in mortgage loans?

Mr. Mauricio: I take this very seriously with respect to our fair lending obligations, our mission of affordability and access to housing, by brown, Black and all people of all backgrounds and colors. I do have responsibility because my compliance oversight program ensures that we are doing all of the right things to promote and advance our fair lending mission.

I am also chair of the company’s LGBTQ employee resource group. Not only is this employee resource group about making sure that our employees have an inclusive environment, to come to work and to be themselves, but this employee resource group plays an active role in that mission of affordability and nondiscriminatory access to housing for all. This group also works in partnership with Black employee resource group to explore ways of how our employees can help us advance these fair lending requirements and these affordability and nondiscriminatory kind of access issues for all.

WSJ: What are some of the risks on your mind?

Mr. Mauricio: In terms of that interrelated risk, I’m focusing on [issues related to] the cybersecurity, the information security, the regulations that apply to those areas. [My focus is] making sure that we have the appropriate compliance risk efforts over that.

Source: WSJ

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