Late Friday, House Financial Services Committee Chairman Jeb Hensarling (R-TX) said that “high ranking Fannie Mae employees have been intentionally violating their government prohibition on lobbying through a series of secret meetings to remove the failed mortgage giant from federal oversight.”
According to Congressman Hensarling’s statement to the Daily Business News, legal and ethical issues are at play in the latest controversy involving one – or more – of GSEs.
Attentive, long-term Daily Business News readers recall last year the editorial call by MHProNews for transparency, and the release of the minutes from closed door meetings between members of the Manufactured Housing Institute (MHI) and the Government Sponsored Enterprises (GSEs).
Neither MHI, nor the GSEs responded to those concerns by releasing said private meeting minutes.
Will Hensarling’s Friday warning prompt the parties to belatedly release their minutes? If not, what are the parties involved hiding?
Bloomberg Exposes Concerns
“For nearly a decade, a top U.S. housing regulator has restricted Fannie Mae and Freddie Mac from trying to influence the raging debate over whether they should live or die,” said Bloomberg.
“But despite those limits, a top Fannie Mae executive has done just that…Brian Brooks, Fannie’s general counsel, has a specific goal,” per Bloomberg, adding that “Brooks, who has ties to Treasury Secretary Steven Mnuchin, wants this done without the involvement of Congress, which has failed since the 2008 financial crisis to come up with a legislative fix for the mortgage giants.”
“When Fannie Mae went broke, it came begging taxpayers for what has turned out to be $120.836 billion in federal bailouts so far. 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.
“If true, this violation is more than an outrage, it is a direct affront on taxpayers and the current structure of the federally-back conservatorship that has allowed Fannie Mae to operate for the last decade. It is a slap in the face of taxpayers that Fannie Mae thinks it can take their money and blatantly ignore the rules that came with it. The American people deserve better. That’s why the Committee will be launching a full investigation into these allegations to identify those responsible and hold them accountable to taxpayers,” per Hensarling’s statement to the Daily Business News.
“But we can’t stop there,” the Texas Congressman said. “In order to truly solve the problem of the broken GSE hybrid finance model, 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.”
“Before the crisis, Fannie and Freddie commanded two of the most well-funded lobbying apparatuses in Washington” Bloomberg’s report said on the controversial topic. “In addition to employing dozens of lobbyists, the companies funneled contributions to nonprofits and think tanks and pressured policy makers to abandon potential regulations or laws the companies thought would constrain them.”
Problematic History, Harmed MH and the Nation
Pre-2008 meltdown, Fannie and Freddie generously funded the lobbying of politicos, like then Congressman Barney Frank. Chuck Schumer is among the names that comes up in the 3 minute 12 second video below, defending the GSEs as being safe and sound.
Congressman Frank and others returned the lobbying dollars from the GSEs with the favor of protection from calls to reform the mortgage giants. Those lawmakers did so by delaying actions that could have mitigated – or perhaps avoid – the meltdown that some warned were coming.
The video clip below is a reminder of the now-all-too-often forgotten history.
Depending upon how “lobbying” is defined, Fannie Mae could be in violation of lobbying with respect to the manufactured housing industry.
Because Fannie is a member of the Manufactured Housing Institute (MHI), a trade group that does lobbying.
That MHI membership would appear on its face to be a conflict of interest for all involved.
Because if MHI is doing its job properly, it should have declined Fannie’s membership, to avoid even the appearance of a conflict of interest.
There could be ethical, and/or legal issues involved in the Fannie/MHI membership matter.
For instance, as the Manufactured Housing Association for Regulatory Reform (MHARR) president and CEO, Mark Weiss, JD, has said that ‘every day that the GSEs don’t robustly provide chattel and other lending under their Duty to Serve mandate to manufactured housing is a gift to Berkshire Hathaway’s manufactured housing lenders.’
There is more involved in this developing controversy. Those related issues will be part of an upcoming Daily Business News report.
Stay tuned. ## (News, analysis and commentary.)
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