Page 33 - September October 2018 Disruption Report Flip Book

FANNIE MAE AND FREDDIE MAC SEJPATN.U-AORCYT.20210818
“There’s something amiss at FHFA”
“There is something amiss at FHFA, and this committee must get to the bottom of it,” said Financial Services Committee Chairman Jeb Hensarling in his opening statement at the September 27th hearing, “Oversight of the Federal Housing Finance Agency’s Role as Conservator and Regulator of the Government Sponsored Enterprises.”
“There’s evidence that the GSE’s have attempted to evade restrictions on CEO salaries with the FHFA’s consent,” said Chairman Hensarling, referring to findings in a recent Inspector General report. “There’s reason to believe that Fannie Mae avoided the FHFA lobbying regulations, and FHFA failed to properly enforce these regulations.”
“There’s strong evidence supporting that Fannie Mae failed to appropriately address senior officer conflicts and FHFA’s failure to exercise adequate oversight in this area, and the list goes on and on,” Hensarling added. “It is somewhere between folly, and peril, and legislative malpractice to continue to entrust almost all of housing finance to two GSE’s and one unelected, unaccountable individual with omnipotent powers. A position that the fifth circuit has found unconstitutional.”
“Effective oversight makes government better and fosters positive change,” said FHA Inspector General Laura Wertheimer. “Healthy skepticism through independent reviews of programs
and operations, both by the inspector general and by Congress, acts as the ‘disinfectant of sunlight’ and is critical to positive and constructive change and to identifying problems, abuses, and deficiencies.” A recent IG’s report identified “four serious management and performance challenges that FHFA faces, including:
• FHFA’s inability to improve oversight of both GSEs, while strengthening internal review processes for non-delegated matters
• The agency’s need to upgrade the supervision of the GSEs and Federal Home Loan Banks
• FHFA’s need to provide oversight of cybersecurity to ensure an effective information security system to protect the data collected by the GSEs from borrowers; and
• FHFA’s oversight must be enhanced over Fannie and Freddie and the GSEs’ relationship with counterparties and third parties.
• “The mortgage system we have today is fundamentally better than the one we had ten years ago, plain and simple,” said Freddie Mac CEO Donald Layton. “It is more safe and sound, more efficient and does a far
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