WASHINGTON — The General Accounting Office is investigating whether the firing of 10 employees as part of a restructuring at the Federal Housing Finance Board in August violated federal civil service rules.
Senate Banking Chairman Paul Sarbanes, D-Md., has asked the GAO to look into the matter as part of a broad study of the Finance Board’s management, stability, and competency as a regulator. A GAO official on Wednesday said the report should be completed by late February.
The board oversees the 12 regional Federal Home Loan banks, which make below-market-rate loans to the 8,000 thrifts, commercial banks, credit unions, and insurers that are members of the system.
This past summer the Finance Board eliminated two offices and 21 positions, 11 of which were already vacant, in a restructuring designed to beef up its supervisory staff. Board officials said the change will allow it to hire 20 additional examiners and financial specialists over the next two years.
“We were clearly not devoting enough resources to the agency’s core mission, supervising the Federal Home Loan banks,” Finance Board Chairman John Korsmo said at the time.
The board provided six months of severance and benefits, as well as job placement services for two months, to the workers it laid off. However, some within the agency said the timing and short notice of the cuts were severe.
“Before these changes are made, we should receive notice,” Finance Board Director Franz Leichter said at the time.
The Finance Board is projected to save $2 million by eliminating the offices of communications and managing director.
“I don’t think there’s any doubt that this was a completely appropriate process that carefully followed all civil service rules,” said Carter Wood, a spokesman for the board.
