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FHFA IG Addresses Senate Banking Committee

Speaking before the ""Senate Banking Committee"":http://banking.senate.gov/public/index.cfm?FuseAction=Home.Home Tuesday, the inspector-general of the ""Federal Housing Finance Agency"":http://www.fhfa.gov/ (FHFA) portrayed the agency as one beset by failures to adequately monitor and validate controls for executive compensation, examinations, and more.


IG Steve Linick referenced a recent report from his office that found the FHFA needs to improve by taking measures to independently validate executive compensation packages.

He said that ""reports also have identified deficiencies in FHFA operations, and these deficiencies appear to reflect two significant and related trends. First, FHFA often relied


on determinations of the Enterprises without independently testing and validating them, thereby giving undue deference to Enterprise decision-making.

""Second, FHFA was not proactive in oversight and enforcement, and accordingly, resource allocations may have affected its ability to oversee the GSEs and enforce its directives,"" he added.

Compensation approval methods proved controversial last month when multiple news outlets publicized $13 million in bonuses for Fannie Mae and Freddie Mac senior-level executives.

He said that he felt concerned failures to mitigate bad controls would lead to more excessive compensation packages for GSE executives in the future.

The inspector-general also said that his office would continue to examine every step of the mortgage underwriting process, ""from the beginning of servicing to the end of servicing.""

Linick further faulted the FHFA for failure to properly provide for examiners by allocating resources in the most sufficient manner.

""FHFA was not proactive in its enforcement,"" he told lawmakers.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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