subject: The I.g. Of Fhfa Opens A Can Of Worms Related To The Foreclosure Crisis [print this page] The I.G. of FHFA opens a can of worms related to the foreclosure crisis. Forty eight years old Steve Linick, the Inspector General of FHFA (Federal Housing Financing Agency) did not mince words when he told the senior executives of Fannie Mae and Freddie Mac earlier in 2011 that he was not the typical regulator of Washington.
He would enforce the power that his office had in issuing subpoenas and conducting searches. Some of his employees wear not only badges but also carry guns. He has to report to Congress of investigations numbering 48 that are being conducted. Many federal agents have been sent to the residences of employees last October regarding defaults in commercial mortgages.
The federal government took over the two agencies, Fannie Mae and Freddie Mac three years previously. This move has cost the taxpayer $151 billion since that time. Fannie and Freddie guarantee mortgages worth over $5 trillion. Together with other federal agencies the duo back nine out of ten loans (new).
The time has now come for them to give an answer not to the shareholders but to FHFA. The latter is now facing stepped up probing from Linicks office. He has sent out reports asking details about how the pay schedules of executives are drawn up and what norms are followed regarding legal settlements.
In 2008 President Bush had nominated Lincik; President Obama re-nominated him but the Senate did not confirm it till 2010 October. He is the first Inspector General of FHFA. He has to start building his department from scratch.
The increasing size of that department has been the cause of friction. Linick supervises a staff numbering one hundred and there are plans to add fifty more in the coming year. The present acting director of FHFA, Edward DeMarco said the size of the Inspector Generals office was without any precedent. The Inspector General of Securities and Exchange Commission (SEC) has 26 on its staff list.
The FHFA wants the jurisdiction of Linick to be that of the regulator but Linick feels that Fannie and Freddie comes within its ambit. Thus justifies the growth of this watchdog within one year.He said, We are in a unique situation here (because) the regulator has become one in the same with regulated entities to some extent.
