CEO Panel: Leading During Uncertain Times

Gain invaluable insights from high-performing industry leaders who have successfully tackled the challenges of senior management in today's dynamic business landscape. Discover how these leaders have fostered a company-first culture while reinventing their businesses, prioritizing inclusivity, humility, and objectivity. Learn directly from their experiences and strategies.


Transcription:

Chana Schoenberger (00:06):

All right, this is our last panel of the day, so we're going to make it count.

(00:11)

I have with me here an illustrious panel of, and you'll notice that these women are not bankers or in some cases they're no longer bankers. We've brought in a pinch hitting crowd of CEOs from other industries to talk to our banking audience about what's going on in the real world, the world that you serve. So I have here Priscilla Almodovar is the new CEO of Fannie Mae and a former banker, but don't hold it against her. Stephanie Ferris, the new CEO and President of FIS and Eva Moskowitz, the Founder and CEO, not New of Success Academy Charter Schools, which is an enormous charter school network. And also the author of a new book called A Plus Parenting, which I'm going to need to read because I think I'm parenting it like a B, B minus at this point. So the title of this panel is Leading Through Uncertainty, and this is something that you all had. It's something that our audience had this year. Banking went through, of course, a major crisis. Regional banks and sort of banks across the financial sector we're seeing bank runs. They were seeing crisis of confidence with customers. You've faced difficult times in your roles as well. Tell us about one challenge and how you navigated it. Priscilla, you want to start?

Priscilla Almodovar (01:26):

Yeah. Thank you. And thank you to the American banker for having me. So I'll just show a recent one. Silicon Valley Bank. So Fannie Mae, I've been in the job maybe four months when it happened while we're in the center of the housing economy and finance. I mean, it's amazing. If you think about it, that $40 billion goes through Fannie Mae every month of all the mortgages we own and then we pay on the mortgage backed securities. So here I am four months, and one thing a crisis does for any leader is you really learn an organization. We have a crisis management plan, as probably many of your banks do. The first question is, do you activate the plan? We brought our people together. I find crisis are great. It's a level of teamwork at a highest order. It's about getting the right people in the room, making sure you understand your risks.

(02:18)

And what was fascinating to me about Silicon Valley Bank is it wasn't just our risks, but all of our counterparties. What was happening to the servicers, what was happening to borrowers was their money second Silicon Valley Bank. So really understanding end to end, we had doc calls every day and once things settle down, that was good. But then there's also with every crisis you learn from them. So I think it's really important both at Fannie Mae, but in prior jobs I've had is once the crisis settles down, you have to do the forensics and hopefully you're a much better team and stronger company and you change some processes because you've learned from that crisis.

Chana Schoenberger (02:56):

What did you learn?

Priscilla Almodovar (02:57):

So we learned a lot. We learned that there's a lot of indirect risks. So we have a lot of banks and counterparties, well, who were their warehouse line bankers? We hadn't tracked that fourth party risk. So now we track that. Now we understand where their lines are, we understand their exposures to various cities. We've never asked where did you keep your deposits? But now we do. So it's really more information about our counterparties and how we're tracking them and how we're tracking just risk overall.

Chana Schoenberger (03:24):

Fascinating. Okay. Stephanie, do you have one?

Stephanie Ferris (03:28):

I'm going to build on what Priscilla said. So FIS is one of the largest financial technology companies in the world. We underpin a lot of the core banking systems in the US and across the globe. And one thing I would say that a crisis brings is focus. It forces you to focus. And I'm a new CEO. I think Priscilla and I were just actually became CEOs in December, and I'm sure she'd tell you the same thing. It's an honor and a privilege to serve the financial services industry in all of you because what every crisis has shown us again and again and again, whether it's the pandemic or the most recent situation, is that fundamentally you cannot have a strong and booming economy or community without strong set of financial services. So as the infrastructure provider to the financial service industry, anytime there's any kind of wobble in the financial services industry, what we take very seriously is making sure that our technology and whatever we're doing to support you, whether it's running your ATMs, your debit cards, your credit cards, or your core banking system needs to be up and running 24x7.

(04:43)

And so every time there's a crisis of confidence. The thing that I tell my team over and over is, let's remember who we're focused on. We're focused on our clients, which are our financial services and our financial institutions because without them and without the strength and stability of those, you see what happens when confidence starts to shake. A specific example, most interestingly is there was a set of tornadoes that went through Little Rock, Arkansas, if you remember earlier this year, completely God's will of the tornadoes. And there are a couple of banks that were routing most of their transactions. It was actually a very large bank on the west coast, but their mainframes in their connections to our data center went through Little Rock and the data center lines went down. And so they couldn't get the connectivity to our little rock data center, which meant the majority of the West coast was not going to be able to access their ATMs in the morning. And so what also comes besides focus is you can see your team really start to come together. And we were able to work with not just the bank, but also the telecom providers to reroute that around so that we could have the connectivity so that on the West coast everybody could get their money in the morning. So it just reminds us constantly through crisis on what's important, which is financial institutions and our customers, and how important our team is to making sure that we support all of you.

Chana Schoenberger (06:16):

And that was a quiet crisis. Nobody knew about that.

Stephanie Ferris (06:18):

Nobody knew. And that's exactly how we all want it to happen. Yes, yes.

Chana Schoenberger (06:25):

Right. When American Banker doesn't know that a bank almost went down, you're definitely doing your job. It's perfect. Eva, how about you?

Eva Moskowitz (06:36):

Well, I am in a very different sector, and while this crisis may seem long gone, for those of us who are educating students, that crisis of covid is still very, very present. So we are the fifth largest school system in New York state. We're educating 21,500 students, most of whom are quite poor, covid really through all children and families, particularly poor families, totally off their game. It also through educators. So we have been sort of clawing our way back. It required redoing our entire school design, not once but three times. And like others have said, it really required rallying the team to have absolute focus on how we were going to provide teaching and learning as best we could under covid. But then the last two years have been just clawing our way back. Kids lost socialization. So when we were back on campus, first graders didn't know how to share. Well, sharing is kind of important skill, and so it really forced us to get down to the studs of what must be done in what order of operations in order to get back. And I can say that we academically have gotten back and I would argue socially and emotionally, we have gotten back while the rest of the country is still talking about learning loss at success two years later after tremendous hard work, we are academically back to where we were.

Priscilla Almodovar (08:24):

Congratulations. Thank you. Yeah, that's great.

Eva Moskowitz (08:27):

Yeah.

Priscilla Almodovar (08:28):

So I would do one thing, and I think this is true of all crises, but you mentioned covid. So in my prior job I was A CEO when covid happened, and I would say a lesson there managing that type of crisis, which I guess is still true of these crises, is communication and just communicating with all stakeholders, right? covid was a great example. We were all in our homes and communicating with your board and shareholders, your regulator. So communication, communication was critical. And as I think about it, hearing you that similarly continues to be the case.

Chana Schoenberger (09:02):

Yeah, I think that's a great point.

Eva Moskowitz (09:03):

I almost find that I'm spending more time communicating than doing because it's so important and there's so many different constituencies, but that was critical during the crisis, but also coming back to campus, parents wanting to know how far behind their kid was and how we were going to provide for the learning loss as well as the dislocation that kids and families experienced during covid.

Chana Schoenberger (09:31):

How do you teach first graders how to share? Because I feel like there's a lot of adults in our lives who could use that lesson.

Eva Moskowitz (09:37):

Yeah, I still have this memory. We do a lot of small group instruction and we were on Zoom for a year and a half even with kindergartners. And when we put them in their small groups, they were very confused and thought this was magic where you could have kids in groups to six to eight after being in groups of 25 to 30. But they did zoom for a year and a half, not because I wanted to, but New York City had very stringent rules. You had to have six feet of social distancing, which meant that kids were only going to be in school one day a week. If you had one case of covid in the building, you had to shut for 10 days. And so with that kind of regimen, it would've been impossible. We had to choose between doing it poorly on campus every other day and shutting down or trying to do it really well on Zoom.

Stephanie Ferris (10:39):

To add on the communication, one thing that I saw coming out of covid is yes, you have to communicate a lot, but people had lost their minds in terms of being polite and mean in communication. So we're attempting to communicate what we know. And the hardest part in a crisis is you don't know most things and so you're trying to communicate something because that's better than nothing. But what I think happened over, I'm sure it's happened for the kids, it also happened for the adults, is they were so used to being behind screens and kind of anonymous that when I was starting to go out now and communicate whatever I'm communicating, people were getting really mean. And so I actually had to start saying to them, now I'm here to communicate and I'm open to have Q and A, but let's start with basic rules about being nice.

(11:30)

And I saw it happen a lot in schools and that's why I'm very empathetic because people are very upset, parents are upset, children are upset, and of course everyone's upset, but the rules of civility still exist and survive. And so whenever I go out and meet with all my teams now I do a little bit of a joke. I'm like, now we're going to have Q and A, but everyone's going to be nice. So kind of back to the how do you teach them to share, let's reteach everybody to be, we can be respectful as we communicate. That's been one of the things I would say for me, I was a little surprised when I went back out and some of the stuff people were emailing me, I was like, oh my gosh, this is way out of bounds. And I think it was through all that crisis and people were shut in their homes for so long. They forgot how to be a human and how to be sharing and how to be kind.

Chana Schoenberger (12:17):

How to live in a society together.

Stephanie Ferris (12:18):

Yes, I think we're back now. So that's good.

Chana Schoenberger (12:21):

That's good. I mean, the nice thing I always say Manhattan has 2 million people. It's a concrete island in the middle of the river. We all have to get along. We don't have a choice. Yes, it's nowhere else to go.

Stephanie Ferris (12:30):

Yes.

Chana Schoenberger (12:31):

We're coming to Ohio next.

Stephanie Ferris (12:33):

Come on over.

Chana Schoenberger (12:36):

So to sort of build off that, when we think about the role of society, how do you think about humility and adaptability in leadership and what have you learned as you move through the CEO role? So Eva, let's start with you because you're the longest tenured CEO in this role

Stephanie Ferris (12:52):

Teach us.

Eva Moskowitz (12:54):

I don't know. I do think humility is just incredibly important. On my risk heat map, there was no pandemic on the risk heat map and we had various scenarios of risk. Now I just assume that whatever risk we're going to face is not on the risk heat map. And so you do have to have humility about the unknown. I also think you have to have courage to lead in moments of crisis. People are scared. It's very tumultuous. And I found that we were able to as an organization, get through the crisis by a level of decisiveness. I closed before anyone in New York City or state had closed, and I made the call to reopen before anyone else. I made the call on mandatory vaccines. I know that's controversial, but if the adults are sick and down, you cannot keep the children safe. And so making sure that you're calling the plays as best you can, decisively I found helped with followership. Obviously you have to be decisive, but thoughtful and sort of looking at everything from a 360 perspective, but failing to call the plays in a crisis actually makes people pretty unsettled.

Chana Schoenberger (14:27):

That's difficult because you're taking, obviously it's your job as a CEO, you take responsibility. So if you make the call and it's the wrong call that's on you,

Eva Moskowitz (14:38):

And I have made wrong calls in my career, so it's not a perfect system. But when you make a wrong call, you also have to own it and explain to people. But when you're thinking about the decisions 24x7, you're most likely as CEO to make the right call because you have been thinking about this obsessively about whether we go right or left and what going right looks like versus going left. And you have to really explain the why of your decision to your people. Otherwise you're not going to have followership.

Stephanie Ferris (15:21):

Yeah, I mean I think all of us as CEOs, you have to have a lot of courage. You have to make a lot of tough calls. And the hardest ones are the ones that are not popular, like the ones that you made. And I was just recently, I asked CEOs all the time, since I'm a new CEO, what's your best advice? And I was actually with the CEO of KPMG today, and I was talking to another one yesterday because as someone that's new in a CEO role, you get introduced to situations you've never been in before. And I was asking one of them in terms of when you make this hard decision, do you feel like your team is with you? Because most of these are hard calls. And what he said was really interesting. He said, they're with me if the call goes well, they're not with me if the call didn't go well.

(16:13)

And that's the point of you have to have courage because you are making the decision yourself. And I would say I've made some hard calls since coming into this role in December. Some of them have been very unpopular, but you have to make them because at the end of the day, you have to always be thinking about your constituents, your clients, the communities that you serve and your employees and trying to balance at the end of the day, what's the right call? Are we going to be able to be here tomorrow? So it does take a ton of courage and it's a lot harder than I thought, and I think as maybe it's just me, but we think really hard about the decisions. Like you were saying, you're thinking about them constantly, but you have to be willing to make a bad call too, and then you just fix that. But then also I also think we all lead with humility. You have to get people to follow you.

Priscilla Almodovar (17:08):

So what I would add to humility and adaptability as a CEO, I agree on the courage point, but I believe any leader CEO or not, you have to be a constant learner and a listener because you don't know all the answers and you're not an expert in everything. So at Fannie Mae, we have 8,000 employees, 10,000 consultants. There's no way the CEO can know everything. So A CEO has to be able to listen because you will make the tough calls. And that ability to listen and learn has to be someone who has humility to admit they don't know everything, but has good judgment to make a call. I also believe as a CEO, you're constantly making decisions without perfect information. And that comes from, I like to think now the number one job I have is hiring good people that are experts in what they do, and I listen and ultimately make the call. But it is that humility to constantly be learning, listening to your people, trusting them, having their back because they too don't have perfect information, owning decisions, learning from your mistakes, the team learns from that as well. It's a constant, and the world's changing too. So part of the learning is I think a CEO has to be adaptable. Things are constantly changing, the economy's constantly changing. So to me, the humility is at the core of any leader, including CEOs.

Eva Moskowitz (18:39):

And I think things are changing faster. Yeah, I mean, I've been doing this for 18 years and I would say just the rapidity of the change requires even more agility than it did a decade ago.

Stephanie Ferris (18:56):

Do you do that? Makes me feel better.

Eva Moskowitz (19:00):

I'm just hoping my own agility can keep up with the need. It's quite the technological, the migration of people. In our case, New York City lost 15% of its children moved out of New York City. The marketplace is changing, the educational tech landscape is changing. Who wants to be a teacher is changing. What it takes to be a teacher is very different than what it was 50 years ago, but even five years ago, it is changing very, very quickly. And so having the people who can see around corners I think is, and having the resources, I really like liquidity. I think it's very important, although I'm not a banker to be prepared for where you might need to make investments. I didn't always understand the importance of that, but,

Priscilla Almodovar (20:06):

Cash is king.

Stephanie Ferris (20:07):

Cash is king.

Priscilla Almodovar (20:08):

Enterprise is liquidity. It's all about liquidity.

Eva Moskowitz (20:10):

I think in not for profits, there isn't the same sensibility about how important that liquidity is. And we have been able to make really important bets because we had a level of liquidity.

Stephanie Ferris (20:27):

I think one of the hardest things too is normally I think as you go up in your career and all of us age, you're using your past experiences, how you worked, how you moved through your career, but the world has changed so much that just, yeah, I came in and I worked and I did this and I did this. That's just not the way the world works anymore and is ever going to work again. And so to your point of having good people around you, you also have to have them in terms of a lot of diversity, especially in age and workforce and location. We have 65,000 people around the world. And I'm sure you're going to get to this question. I know you are around return to office and I'll maybe save it for that. But one of the things as I moved around the world to our locations to figure out is it's not a one size fits all solve.

(21:22)

Not for us at least because it's so localized in that community what that purpose of that office is for who's in that office, what they're there to do, what their problems are at home. And the world has just fundamentally changed. And so who that office was before may not be who that office is now. And so this one-stop shop is not really working for me as a big global company. And I'm sure we'll come back to that on a question, but it's hard because you want to use all of the way, oh, this is how it was for me. I'll give you my advice. It's not necessarily relevant anymore. And that's what I think's a little harder.

Chana Schoenberger (21:59):

Yeah, no, definitely. But to expand on what you were saying a minute ago, the idea of listening because as the CEO, you want to listen to all the experts on your team and maybe folks that you bring in, but then you have to be the one to say, I hear what you're saying, but we're not going to do it your way and do it this way instead.

Priscilla Almodovar (22:17):

And if you listen, you ask better questions. So I think that's ultimately our job is to ask those tough questions to be able to make decisions without perfect information. Right, right. Definitely.

Chana Schoenberger (22:31):

Yeah. Okay, so we touched on this a little bit, but the economy has hit some rough patches ever since the pandemic. We've got inflation, high interest rates, major worry for people, impacts people as customers, people as families, parents of students. How are you dealing with economic issues in your industry? Go ahead.

Priscilla Almodovar (22:54):

How many of you have a mortgage? How many have a mortgage with a 4% or below?

(23:01)

So it is fascinating what's happening right now, and it's the economy inflation rates. It is a tale of two markets in housing right now. So you have those of the lucky ones that took advantage of a once in a lifetime low mortgage rates. You have a lot of equity in your home because home prices have gone up over 20% and you have a lot of equity, but you're probably locked into that home. So if you're happy in your home, you're one of the lucky ones. The flip side is if you're not a homeowner and our surveys show that more than 82% of Americans want to be homeowners, it's still the way you build generational wealth in our country. If you look at the disparity between black households and Latino households and white households, there's a huge gap. It is really hard, and part of it is affordability because mortgage rates just today, if you all read the paper, the 10 year 4.8 mortgage rates, imagine seven was a psychological handle.

(23:54)

The fact that it could be 8% because as you all know, you as bankers, it's the 10 year, but it's that spread of uncertainty and that's what's happening right now. So it's probably higher for longer. At Fannie Mae, we have been consistent that we were in the mild recession camp. We have been consistently because of Powell's steadfast commitment to 2% in inflation. So because of that, and with strong GDP and labor, we've stuck to that. So it is harder. So our number one job during this time is to make sure we continue to be a stable source of mortgage credit and that we continue to keep an eye on Fannie Mae's mission and profit, that we continue to work on the liquidity. That's our main job, but also how do we continue to make housing more equitable and sustainable and let people know housing is a long game. So right now might be unaffordable because prices are high, mortgage rates are high, but it's a long-term. Investment rates will come down at some point. You can always refinance and making sure that we continue that education for the country and the nation because it's still the number one way that most Americans think they will build wealth in this country.

Eva Moskowitz (25:09):

I view education as an engine of economic upward mobility. We all know that if children don't learn to read and count, they don't have much of an economic future.

Priscilla Almodovar (25:22):

And they can't work in a bank certainly.

Eva Moskowitz (25:23):

Certainly not. But our aspirations are much higher than that. So we're serving 21,500 students, as I said, mostly from very poor communities in New York City. We're in four out of five boroughs and we have a hundred percent admission to college rate. And we believe that that is the life transforming. I know there are a lot of opinions these days about does everyone have to go to college or not? We think that for our students, just when they're getting their turn, the country's sort of saying maybe vocational ed and maybe this and maybe that. And I'm not against those. European countries actually do that quite well. We tend to in America make it a tracking system. So those kids end up getting a disadvantage, but we think a hundred percent of kids can go to college in today's world. So we think that the economic health of this country is dependent on our children getting a first class education.

(26:43)

And you should know that no country around the globe spends more money on public education than America, and yet we're in the bottom quartile and bottom third in most disciplines, China and India are producing scientists and engineers at a rate of five to one. So if you fast forward and you take into account how fast the world is changing that kind of technological dominance is going to be an enormous problem for wealth generation in this country. And so we're trying to do our part as fast as humanly possible. We are growing by 50% over the next four years. We are currently educating one in 60 New York City children, and at the end of that four years, we will be educating one in 32 New York City children. And our goal is not just to close the achievement gap, we are reversing it. So our black and brown students are outperforming white affluent students in Scarsdale, Chappaqua, upper East, east Hampton, you name it. Our kids are succeeding at a very high level, and you should know that we're a random lottery school. We don't get to select and we get about $8,000 less per kid than the district gets. So we think it's possible, but we are really going to have to have more operators to sort of solve the educational crisis in this city, state and country.

Stephanie Ferris (28:29):

So I'll take two different pieces of this argument. I'll go to labor and employees like all of you, we are really proud of, I think some of the positive that's happened over the last couple of years where we've all raised our minimum wages that we're paying and our contact centers. We also, like I said, we're a global organization. We have a large amount of colleagues in the UK who last year during the winter had some pretty tough energy crisis's happening. So we were really pleased to be able to provide very, very significant support to those colleagues around in India. There's pretty significant wage inflation still going on there. We want to make sure that we can keep pace with that so we can have the best and the brightest working for us as well. So I would say we've been very focused on making sure that we can continue to attract and retain the best employees and colleagues out there.

(29:26)

That being said, our labor inflation from 2019 to 2022 was up about 10%. So if you thought about what we had to pay people in base merit plus what we had had to pay them to retain, plus what we had to pay them to hire new, that's a very, very significant increase in an industry where I serve. And my business model is five and seven and 10 year contracts at fixed rates. So that's that put my business model under pretty significant challenge given that the biggest line item in my cost structure is people. They're also the value that I provide besides my technology, I need to make sure I take care of them. But combined with the cost of labor plus the cost of rising benefits, it's a very significant increase for all of us. And so when you think about that and then you think about not having an ability really to pass price along, it becomes fundamentally challenging when you think about your profit margins and delivering on investor expectations.

(30:37)

I'm not alone. And so now think about what's happening in banking with the cost of deposits going up and now the profitability of your overall bank is also challenged. And so our job as we think about serving all of you is making sure that I can continue to do that with the best and brightest. I have to figure out on my side of the equation how to do it more efficiently and how to do it with higher productivity, but then also deliver more products and services to you and then make sure I work with the financial institutions around the world because I certainly see and hear about the profitability challenges, the regulatory challenges that are coming down from the government. And then broadly, you also have rising labor rates. So my job is making sure that the products and services that we deliver can help you with those.

(31:29)

Whether you need to outsource more of those activities to us to drive your costs down, you want to buy more digital products so you can deliver digitally versus having as many people in the branches. So there's two pieces of the equation and they're very challenging and I think they've been very challenging for almost every company, whether you're small business or large business, everyone's been dealing with the cost of labor, tight labor markets. I don't think that's changing, quite frankly. Even if we go into, and I'm with you, my recession, if you look at the labor pool broadly, specifically in the US during covid, we had so many of the 50 and above permanently leave the workforce. I think we're in for a tight labor market generally for the foreseeable future, which is where we're also planning for just higher rates. So if you think about where we are, we have higher interest rates, I think we're all ready to live with that for a while. We have probably a tight labor market for a while, even with a mild or moderate recession. And so those are challenges when you're trying to run a business and you have profitability commitments, whether to your private or public investors. So it's a challenging time, but I think that's also what makes it fun, trying to solve all those equations. I think that's easier than trying to educate how many children she's talking about. I can't even imagine trying to do that. I'd rather do mine than hers. And she's clearly better at it.

Chana Schoenberger (32:55):

Yes, it's hard enough to just raise the children in your house.

Stephanie Ferris (32:57):

No, my God. Yeah.

Chana Schoenberger (32:59):

Alright, we have about 10 minutes left, so I have a lot more questions for these ladies, but I would like to open the floor up to questions from the audience. There are folks with microphones, so if you have a question, raise your hand. Yes. Laura

Laura (33:21):

Because the world's oldest spinning instructor, and I teach without one. This is for Eva. Congratulations on the hard work. But when you think about the future leadership in education, and you said something about how teachers have to evolve and I'm assuming principals have to evolve, what are the qualities or what do you think it's going to take for you to continue to drive that success? And going back to Fannie Mae and affordable housing, there's no housing stability, lack of affordable housing and all these other challenges that they have to deal with.

Eva Moskowitz (33:58):

Yeah, I think that good teachers and good principals know how to build a culture of achievement. And I think culture has been underestimated. Everybody in high performance organizations thinks about culture, but schools don't think about culture and they're little communities. If you have a culture of achievement, a culture of kindness in your kindergarten class, a culture of reading, a culture of mathematics, then the kids are going to achieve. They're going to be invested in achievement. You're going to celebrate achievement and growth. But many educators are not that skilled in building that culture. And so part of our success at success, we have a standardized model. So all of our elementary schools and all of our middles and high school have the same content and curriculum, same school design, and we spend a lot of time educating educators about how to build a culture and how to notice when there's a transgression in the culture and what do you do about that and how do you bring everyone together so that they're really, really clear on why we're here, what we do, and how we do it. And you can get a level of consistency in outcomes and consistency of experience. I mean, we're in the human development work. We're trying to raise children to be well-educated, to kind to economically literate.

(35:54)

And schooling is kind of running a hotel for children 24x7. We also really believe that the experience that children and families have has to be very pleasurable. We talk a lot about kids falling in love with school, and that's the experience they should have. We talk a lot about what is called extracurricular for us is co-curricular, so art and music and dance and sports and chess and coding and debate. We provide that for our poor kids because we think that experience is as important as the mathematics and the science. But I would say what educators are missing often today is how do you build a culture of a high performance culture.

Chana Schoenberger (36:57):

Yes. Got a question over here.

Audience Member 2 (37:12):

I am curious how each of you think about your role as CEO in very important organizations impacting broadly. You've talked about homeownership education, labor shortages, but just your role as CEOs leading during these uncertain times more from a societal standpoint or community standpoint.

Stephanie Ferris (37:41):

Yeah, I mean, I'll start because I actually think about it a lot. I mean, I think everyone that's a CEO and all of you too, you take your role in your organization very seriously, and every person sitting in this room has a great impact on their community.

(38:02)

It's interesting because people ask me, well, how's it going since you took the CEO role? And I say, well, if you really want to know, it's like, but for real, the impact it weighs on you when you take the CEO role because it becomes very real because the buck stops here in terms of the decisions that we make. But what I would say is for those of us that serve financial services, it truly is an honor and a privilege and a huge amount of responsibility because you're critically important to the community. You cannot have a strong community without a strong set of banks in the community. I mean, we've proven that over and over and whether the banks facilitate mortgages or money movement or all of that. And so how it ends up coming into my life is I'm just trying to personally not screw it up. And what I mean by that is, so I have two teenage daughters who spend a lot of time telling me all the things I'm wearing wrong, doing wrong.

(39:01)

It comes in terms of making sure that no, you can't have that party. Why can't you have that party? Because I don't want anything that I do personally or something I do personally to impact my company and impact the community in a bad way. I don't know if that makes sense. But that's the personal connection I would say, is you're now always thinking about, okay, my responsibility of course is to my family, but it's also to my company and community, and I don't want to do something silly or someone that is around me do something silly to impact that in a negative way. We take it so seriously. I'm not sure that was the question you were asking, but I thought I'd try it out.

Priscilla Almodovar (39:38):

Look, I would say at Fannie Mae, I too feel the responsibility. This is a dream job for me. I've been a banker, I've been in finance my entire life. And to run a company that in its core, it's critical, it's as a purpose in what we do. And we touch so many, but we're not B2C. We buy in the secondary market, but banks originate what we want to buy. So I feel this incredible responsibility to, I like to say that we're a technology company that happens to take credit risk on mortgages. How do I continue to keep our employees motivated when mortgage is slow right now? I mean, our acquisitions are like a third of last year or a third of the year before. How do we continue to play the long game of continuing to look at how we could assess credit risk?

(40:27)

And just because someone has low income or low wealth, how do we use technology to look at someone's bank statements? You learn a lot about their consumer behaviors. We can take that credit risk. So we're still investing during this time. We're not going to slow down because it will change and we want to continue. We're not changing our credit. It's not about, it's changing the credit box, but how do we let more people in that box and how do I keep our employees motivated that we still have a lot of work to do that sometimes when things are down, you just shift in what you're doing and continue that because we play such a critical role in the nation. And frankly, as a Latino woman, 70% of future household will be Latino. So how do I continue to evolve and understand their journey in becoming a consumer?

(41:12)

They have thin credit histories or no credit. How do we look at their everyone? But this is, we're focusing on the black journey in the Latino journey. How do we get consumers to educate them that early on when you're in your twenties behaviors, you do have an impact, could have an impact later on for any credit product. So education is a big part of what we're doing. So how do I continue to accelerate the great work that was already happening at Fannie Mae? I feel a responsibility to the team because they've been doing this great work, a responsibility frankly, to the country to continue to run Fannie Mae in a safe and sound way and always be a reliable source of credit.

Chana Schoenberger (41:54):

Great. Great. Okay. Time for one more question. I'm going to keep this one for myself. When we think about the workplace culture, and we alluded to this before, what do you think the ideal workplace looks like and what have you done in your own organization to make it look that way? So let's go first. All right, Eva.

Eva Moskowitz (42:19):

I mean, schools are kind of odd workplaces, but generally, particularly in poor areas, they are aesthetically unpleasing. They are dirty, they are not houses of learning where you are communicating the respect for the children, the respect for the educators. So we start with the physical plant. We actually think it's really, really important. We've limited funds, so we're not talking four seasons level, but we really work very, very hard to beautify our buildings, given that some of them are 1907 buildings and some of them are 1967 buildings, not the greatest period in American architectural history.

Chana Schoenberger (43:11):

Mid-century modern is what we call that now.

Eva Moskowitz (43:13):

Yes. And school buildings often don't have elevators and they have no air conditioning. I mean, it's challenging to make them work. We also have a level of specialization, which is fairly unusual in education. So the principal is not the business operations manager. The principal is the leader of instruction and the child and family's experience. And we have other people, there's actually quite a lot in schools that is operational. And so we try and have that level of specialization so that the teachers can teach and the principals can lead and manage and not do everything else. So you can't quite imagine it. But a good school will assess children very frequently, so they have their finger on the pulse. And so we have different people who administer those assessments because there's a lot of to toing and froing, and they serve up to the teachers and the principals, the data so that they can do data-driven instruction.

(44:27)

So there are many decisions we make in the school design with the teacher at the center, or the principal at the center of our decision-making, so we can free them up from all of the administrative work. You have to collect 26 forms from every child and family in New York State and New York City, if teachers were doing all that work, they would not get to the mathematics, they would not get to the poetry. And so really thinking about the org design in a way that is going to make the life of the teacher and the principal as easy as possible, given that it's a hard job.

Priscilla Almodovar (45:11):

Well, our culture, we say we learn, we listen and we lead. So I'll just highlight the learning. We're learning and continuously improving is very core to our culture. We acknowledge mistakes. A word I learned when I joined Fannie Mae is psychological safety. I had not heard that term before. And I have to say we mean it. We serve our employees. We're very flexible right now when it comes to remote work and hybrid work. And it's the feedback we're getting from employees. People speak up, it's encouraged. There's no retaliation because again, we listen and learn from that. This constant sense of excellence, I think it's in the core of what we do. It's a learning mindset place, and we treat people very respectfully and everyone at all levels feel very comfortable and psychologically safe at Fannie Mae.

Stephanie Ferris (46:09):

Oh, you want me to go ahead? Okay, last thing. Yes. This is such a loaded topic for me. So we're global, 65,000 people. When covid hit, we took everybody home in two weeks, which by the way, we had a plan that we were going to get everybody to be able to work remotely, which was going to be a 36 month cycle, which well now assume, and you have to have it done by the end of the year, use that kind of mentality. So that's great. And as during the last couple of years, what we did was consolidated offices and we globalized a lot of jobs. So transparently, it's really hard now to think about trying to bring people back because we've lost a bit of our culture.

(46:55)

People have been out of the office for so long, and their jobs have changed and we've globalized and all of that is good. And now what we're trying to figure out is how and why do we bring people back? And I think fundamentally it comes back to local. What is the purpose of the local office? What is that purpose? Like schools, right? Even though you have a framework, each school has a bit of its own culture, I suspect, because of the leaders and the teachers in that culture. And so we have the same thing, which is we have a great culture from the corporate, but each location, location has its own identity and its own culture and its own community. And I think we've had a little bit of it becoming lost. And so we're not all back in office. And so we're trying to figure out now what is the office to everybody, because I agree with you, we took the time during covid to visually make them better. And I agree with you. People want that, but they don't want to be forced back into the office just because. And so we have to start to think about what is the purpose of the office and why are we bringing people back? Is it just because or is there a real reason? And so we're working on that.

Chana Schoenberger (48:02):

Great. Great. Well, thank you so much for being our cleanup hitters today. We really appreciate it.

Stephanie Ferris (48:09):

That's it. Thank you. Thank you.