Rep. Jeb Hensarling, Chairman of the House Financial Services Committee [1], said on Friday that the committee would be launching a full investigation into recent allegations in a Bloomberg report [2] that high-ranking Fannie Mae employees were intentionally violating their government prohibition on lobbying.
Hensarling said that if the media report was true, this violation was “more than an outrage, it is a direct affront on taxpayers and the current structure of the federally-backed conservatorship that has allowed Fannie Mae to operate for the last decade.”
Fannie Mae [3] received a bailout of more than $120 billion during the financial crisis. “As a condition of receiving those funds, Fannie Mae was explicitly prohibited from engaging in ‘all political activities—including all lobbying,’ a prohibition which it is now being reported Fannie has deliberately violated,” Hensarling said.
However, Fannie Mae has denied these allegations. “Fannie Mae does not lobby and has not advocated for any specific policy outcomes on housing finance reform,” Pete Bakel, a spokesperson for Fannie Mae, told MReport.
Calling on the Congress to truly solve the problem of “the broken GSE hybrid finance model,” Hensarling said, “Congress must enact sustainable housing finance reform as soon as possible and once and for all get rid of any backdoor attempts to resurrect the old, failed ways of the past.”
These allegations stem from a recent report that quoted unnamed sources saying that some of Fannie Mae’s executives were secretly lobbying among housing finance stakeholders that the best outcome for the GSEs would be to get released from government control and that they wanted it done without the involvement of the Congress.
“As part of our normal course of business, we analyze policy proposals and existing law,” Bakel said. “We answer questions from customers, industry groups and similar stakeholders and provide information about potential implications of the proposals on the market. It is up to Congress, not Fannie Mae, to determine the future of housing finance reform legislation.”