FHFA was created in 2008 under the Housing and Economic Recovery Act. It’s primary function was as a regulator for Fannie Mae,Freddie Mac and the FHL. Later in 2008 though, the enterprises were placed in conservatorship and the FHFA became supervisor as well as conservator. It has been operating now for nearly ten years in that capacity. Of note is that the FHFA has so far been exempt from FOIA transparency.
The OIG for the FHFA is tasked with oversight reports as well as investigations. From October 2016 to March 2017 alone, they pursued 71 indictments, achieved 60 conviction or plea deals, recovered over $28 million in criminal forfeitures and restitutions; and achieved over $12 billion in fines civil settlements and fines.
It presented its semi-annual report to congress covering October 1, 2016to March 31, 2017 in the last few months. In that report, the OIG expressed concerns.
1) Time for the enterprises to be restructured or addressed after considering their role in the housing market. Melvin Watt is the current director of FHFA since his Obama appointment in 2013. He has echoed that view in recognizing that this was not meant to be a permanent fix.
Once placed in this conservatorship though it is proving very difficult to extract it at least according to the OIG. Oddly the OIG makes reference to some interesting statistics. The Treasury had to invest $187.5 billion into Fannie Mae and Freddie Mac enterprises to rescue them from insolvency. By December 2016, the Treasury had been paid $255.8 billion in dividends on its investment. In other words despite all its complicated problems, their combine market share of newly issued mortgage-backed securities is more than 65%. Their combined total assets equal about $5.3 TRILLION and their combined debt equals about $5 TRILLION.
The timing of restructuring etc is still unknown according to OIG. When the question of restructuring or elimination was posed by Senator Hatch to Treasury Secretary Mnunchin, his response basically was that the US needs a comprehensive approach to its housing finance policy. He was cautiously echoing the same thought that now is a good time to review and assess. All of the factors together led to the OIG noting that the conservatorship has been and continues to be a critical risk.
2) Fannie Mae’s Dallas regional headquarters project – consolidation and relocation. After anonymous complaints OIG did an investigation and found that the FHFA had not done much work in the oversight of the project. This in conjunction with a 2016 investigation of the D.C. office had the OIG recommending better oversight procedures. As conservator FHFA is allowed to delegate authority and in this case that was done but the delegation should not have absolved FHFA of its oversight.
3) Effective supervision practices of FHFA After several investigations and reports of Freddie Mac and the other enterprises, OIG continues to call into question how FHFA is actually effectively supervising these enterprises. (FHFA stated their operating budget for FY 2016 was 199.1 million.)
More can be read at their Semi-Annual Report to Congress HERE.
The gist appears to be that this is another agency who is supposed to be functioning for a singular purpose – conservator of housing industry programs but has not had a sunset clause nor indications of a sunset strategy to end the drain on the taxpayers. In the scheme of themes their budget is only a small part of the whole but considering what they are overseeing (over $5 trillion in assets and debt) and the need for housing market resolution by the government in an extremely volatile and critical risk area, this is a really big deal. One that congress has been lagging behind for years to resolve. Amazing how the congress can move in a week on one issue from introduction to presidential approval but something this large hasn’t even made it as a bleep on their radar.
What started me checking on this was an article suggesting misuse of the funds from these enterprises to bolster Obamacare. We already are aware that Social Security programs and other avenues were hit by Obama to cover his shortages but this one is also very worrying. This is not a familiar group and did not give research on the subject so I am only mentioning for now, someone with more time, interest, and access might be able to expand on their assertions.
American Liberty Report: “Obama Admin Took Profits from Freddie Mac and Frannie Mae to Pay for Obamacare.”
“The Obama Administration is under fire again. In a new slew of unsealed documents, they were caught red-handed stealing funds from citizens to pay for social programs. In this case, the Net Worth Sweep cases surrounding Freddie Mac and Fannie Mae are the center of attention, and they show that Obama largely operated his government through illicit means.
When you see just how far the administration went to hide and steal funds and circumvent the federal process, you will be enraged. Worst of all, the actions were taken deliberately, as evidenced by the newly released documents.”
Good thing I have dentures I can remove. By now with all the documents funneling out into the open on the corruption, complete disregard for the laws or citizens, national security disregard for constitutional right, and the “fundamental” changes wrought, I would have ground every tooth into dust.
It is infuriating that Congress and MSM are only interested in destroying a duly appointed-and-approved-by citizen’s president rather than taking care of real business…..but we all know why without even voicing it.