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Who's Watching Fannie and Freddie? Oversight Agency Fires Its IG

Posted By James Gattuso On November 16, 2009 @ 3:43 pm In Economics | Comments Disabled

Don’t look now, but there’s no independent Inspector General at the Federal Housing Finance Agency — which is responsible for overseeing federally-run finance giants Fannie Mae and Freddie Mac. As reported in the Huffington Post [1] of all places, the former Inspector General, Ed Kelley was relieved of his duties in September. Officials at the housing agency had challenged his authority, arguing that he was never properly appointed to the position. The matter was referred to the Department of Justice, which agreed [2]. Although Kelley had been IG for the agency’s precedessor, DOJ concluded he needed to be formally re-appointed when the FHFA was created in 2008.

President Obama, of course, can always appoint a new IG. But so far none has been named, and a selection looks to be some time [3] away.

The net result is that the office is now empty. Kelley now serves as an internal auditor at the FHFA, but enjoys no independence. Kelley had been working on several matters with the overall TARP inspector general, Neil Barofsky, when his tenure was cut short. “It’s a serious gap in oversight,” Barofsky was quoted [1] as saying. “It does impact what we do. Ed was a member of our TARP IG council and a partner in our investigative work.”

Meanwhile, Fannie Mae and Freddie Mac continue to burn through taxpayer money. Between them, they’ve already received over $100 billion in taxpayer money. And its not over yet: Fannie Mae for an additional $15 billion earlier [4] this month. It’s a bad time and place to have no watchdog on duty.


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URL to article: http://blog.heritage.org/2009/11/16/whos-watching-fannie-and-freddie-oversight-agency-fires-its-ig/

URLs in this post:

[1] Huffington Post: http://www.huffingtonpost.com/2009/11/10/fannie-and-freddie-fire-t_n_353018.html

[2] agreed: http://big.assets.huffingtonpost.com/dojargument.pdf

[3] some time: http://www.bloomberg.com/apps/news?pid=20601103&sid=aZtfCbQefexo

[4] earlier: http://www.marketwatch.com/story/fannie-mae-asks-for-15-billion-more-from-feds-2009-11-05

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