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Discrimination Found At Freddie Mac

September 2, 1998

WASHINGTON (AP) _ The Equal Employment Opportunity Commission has found widespread racial discrimination against black employees at the federal mortgage company Freddie Mac.

The EEOC complaint grew out of a $15 million race-discrimination lawsuit from Tony Morgan, Freddie Mac’s former director of executive corporate relations. He contends supervisors created a ``hostile work environment″ that subjected black employees to threats and racial slurs.

Sharon McHale, a Freddie Mac spokeswoman, denied the EEOC allegations and said the company has taken immediate corrective action in the few racial incidents that have occurred.

``We have reiterated our zero-tolerance policy,″ McHale said. ``We have had a handful of racially sensitive incidents over the past six or seven years and we have said they won’t be tolerated.″

In June, Morgan, who is black, sued Freddie Mac in U.S. District Court.

The EEOC findings were disclosed in an Aug. 14 letter from EEOC Director Tulio L. Diaz Jr. The letter was released Wednesday by an attorney for Morgan.

The EEOC found that racial jokes were and continue to be sent through the company’s e-mail system, racial epithets continue to be written on walls and black employees who complain of the discrimination at subject to ``hate″ messages.

``EEOC examination of evidence reveals the respondent’s disregard for the civil rights of black employees has resulted in a hostile work environment,″ the EEOC letter states.

Freddie Mac, the Federal Home Loan Mortgage Corp. based suburban McLean, Va., was also accused of failing to promote black employees as well as withholding bonuses and promotions.

The alleged pattern of discrimination has resulted in a workplace where blacks are underrepresented in professional, office and managerial positions, according to the EEOC.

``This is a widespread set of circumstances,″ EEOC attorney Barbara Brice-Brown said Wednesday. ``Based on our 20-month investigation, we have reasonable cause to believe there was discrimination against African-American employees.″

The EEOC added that Freddie Mac CEO Leland Brendsal knew of the racism but hasn’t acted to stop it.

McHale, the Freddie Mac spokeswoman, said the company has never retaliated against employees who have complained of discrimination and added that Brendsal ``has been the company’s most vocal proponent for diversity.″

``The allegations are groundless and we will make that abundantly clear,″ McHale said.

Freddie Mac is a stockholder-owned corporation chartered by Congress to increase the supply of money that commercial banks and other mortgage lenders can make available to home buyers.

The company conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities guaranteed by Freddie Mac for sale to investors.

With the finding, the EEOC and Freddie Mac will schedule conciliation talks.

The outcome of the talks will determine whether the matter is dropped or whether the EEOC will file its own lawsuit against the lending company or join Morgan’s lawsuit, Brice-Brown said.

In July 1997, the EEOC filed a complaint alleging that Freddie Mac maintained a ``racially offensive work environment″ dating to 1991. A federal judge in Virginia denied the EEOC’s request for a preliminary injunction against the company, finding Freddie Mac had shown ``genuine intent″ to make changes.

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