5 questions as lawmakers set to probe FHFA, GSE scandals
WASHINGTON — As the House Financial Services Committee prepares to hold a hearing Thursday on oversight of the Federal Housing Finance Agency, the exact focus of the hearing remains somewhat in flux.
The committee’s official announcement of the hearing suggested that it would look at the agency’s role as conservator for Fannie Mae and Freddie Mac. The hearing notice referred to allegations of “waste, fraud and abuse” at the FHFA and the two mortgage giants.
“Specifically, the committee will examine FHFA’s policies and procedures used to supervise Fannie Mae and Freddie Mac, the FHFA’s structure and the need to reform the housing finance system in the United States,” the majority staff on the committee wrote in a memo to committee members Sept. 24.
But the timing of the hearing, as FHFA Director Mel Watt faces an employee's allegations of sexual harassment, has led many to believe that the investigation of his alleged conduct will be a central component of the hearing. That was bolstered by revelations Wednesday that his accuser, Simone Grimes, had been invited by the committee to testify. The hearing is also set to take place on the same day that the Senate Judiciary Committee plans to hold a hearing looking at sexual misconduct allegations against Supreme Court nominee Brett Kavanaugh.
The official docket lists four witnesses for the hearing: Watt, FHFA Inspector General Laura Wertheimer, Fannie CEO Timothy Mayopoulos and Freddie CEO Don Layton.
However, the attorney for Grimes, who alleges that Watt denied her a pay raise after she refused his advances, told American Banker that Rep. Maxine Waters, the ranking Democrat on the committee, has expressed interest in having Grimes testify. The staff for both Waters and Chairman Jeb Hensarling have been in contact with Grimes about the possibility of adding her as a witness.
Observers said it is unclear what lawmakers hope to gain from the proceeding.
“There’s not a variety of outsiders, there’s not a bunch of written materials that have been submitted in advance, there’s not a particular question or controversial question that’s being made and so to me it looks like more like a pro forma meeting where not a lot of things are going to happen,” said Laurence Platt, a partner at the law firm Mayer Brown.
Here are five questions to consider about the hearing: