DS News - U.S. Bank

18 HENSARLING: "THERE'S SOMETHING AMISS AT FHFA ..." "ere is something amiss at FHFA, and this committee must get to the bottom of it," said Financial Services Committee Chairman Jeb Hensarling (R-Texas) during his opening statements at a hearing entitled "Oversight of the Federal Housing Finance Agency's role as conservator and regulator of the Government Sponsored Enterprises." In his opening statement, Hensarling spoke on reports from the Inspector General, which appeared to back up claims that the GSEs have engaged in excessive spending and a failure of the Federal Housing Finance Agency (FHFA) to regulate that spending. "ere's evidence that the GSEs have attempted to evade restrictions on CEO salaries with the FHFA's consent," Chairman Hensarling said. "ere's reason to believe that Fannie Mae avoided the FHFA lobbying regulations, and FHFA failed to properly enforce these regulations. ere's evidence that the GSEs have attempted to evade restrictions on CEO salaries with the FHFA's consent. ere'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 GSEs and one unelected, unaccountable individual with omnipotent powers, a position that the Fifth Circuit has found unconstitutional." Additional testimony was brought by Laura Wertheimer, Inspector General, FHFA. Wertheimer spoke on the FHFA's dual role as conservator and regulator of the FHFA, as well as its role as regulator of the Federal Home Loan Banks. "Effective oversight makes government better and fosters positive change," Wertheimer said in her statement. "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." Speaking on behalf of Freddie Mac, Freddie Mac CEO Donald H. Layton's written testimony covered the improvements made to the GSE in the years following conservatorship. According to Layton, Freddie Mac and the mortgage system as a whole have made significant improvements in the years since the crisis. "e mortgage system we have today is fundamentally better than the one we had 10 years ago, plain and simple," Layton said. "It is more safe and sound, more efficient, and does a far better job of protecting taxpayers. Freddie Mac is similarly much better, with a substantially improved business model. We are absolutely not the government sponsored enterprise (GSE) of the past." Fannie Mae CEO Timothy J. Mayopoulos made similar claims, stating that since entering conservatorship, Fannie Mae's leadership has stabilized the company, become more profitable, and built the "strongest book in the company's history." "In short, in these past 10 years, we have made our conservatorship, in spite of its origins, a clear success for taxpayers, homeowners, and renters," Mayopoulos said. Mayopoulos also addressed concerns about the use of taxpayer money to fund Fannie Mae during the crisis. "It is true that Fannie Mae received more taxpayer support than any other company during the financial crisis," he said, "yet, it has also returned more profits to taxpayers than any other company, measured on both an absolute basis and net of the support we received." "It is somewhere between folly and peril and legislative malpractice to continue to entrust almost all of housing finance to two GSEs and one unelected, unaccountable individual with omnipotent powers."

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