U.S. Sen. Chuck Grassley (R-Iowa), Chairman of the Senate Judiciary Committee, and Sen. Ron Johnson (R-Wisconsin), Chairman of the Homeland Security and Government Affairs Committee, want more information from the Federal Housing Finance Agency’s Office of the Inspector General (FHFA OIG ) on the OIG’s finances, hiring and firing practices, and organizational chart changes.
The FHFA OIG is a six-year old independent watchdog that monitors institutional housing investments totaling $5 trillion and audits the FHFA’s conservatorship of Fannie Mae and Freddie Mac as well as the Agency’s supervision of the Federal Home Loan Banks.
“An ineffectual IG’s office benefits no one,” a Grassley spokeswoman told DS News. “The inquiry involves serious allegations that this IG office wasted money, lowered productivity, and alienated staff. It’s reasonable to conclude that if these shortcomings are borne out, the result would be ineffective oversight of the agency responsible for the GSEs. The senators are trying to tackle the concrete problems before ineffective agency oversight becomes widespread.”
Grassley wrote to the IG, Laura Wertheimer, back in March  regarding some organizational changes made to the OIG that were detailed in the OIG’s semiannual reports to Congress —specifically the reduction of the number of employees in the IG’s Office of Audit (OA) from 36 to nine within a year’s period. Grassley noted in the letter that witnesses that Wertheimer canceled as many as a half dozen audits or other projects soon after assuming the position of IG in 2014. Grassley requested several documents as well as interviews with certain individuals pertaining to those issues.
“An ineffectual IG’s office benefits no one.”
Spokesperson for Sen. Chuck Grassley
“Beyond these details of work performance in OA, individuals whom Committee staff have interviewed have suggested a number of personnel actions that deserve further scrutiny,” Grassley said. “These include, for example, the selection and hiring of candidates who lacked advertised position qualifications and the basis for the authority to conduct a buyout at OA through your voluntary separation program, among others.”
Johnson followed up with a letter to Wertheimer in April , saying that “Independent, transparent, and accountable inspectors general are vital to rooting out waste, fraud, and abuse. To better understand the issues facing the FHFA OIG, I request the production of documents previously requested by Senator Grassley.”
Grassley and Johnson then wrote a letter in May to Wertheimer  asking several questions regarding the FHFA OIG’s retention of private attorneys.
FHFA OIG’s Chief Counsel, Leonard J. DePasquale, responded in an email dated May 31 , “Kindly note that additional responses and information sought in your requests comprise pre-decisional and deliberative information, as well as attorney-client communications, all of which are privileged and involve pending matters. Accordingly, that information is not included in this production. As with the prior requests for privileged information, we remain prepared to discuss with Committee staff possible approaches that may result in a mutually satisfactory resolution.”
In response to the Senators' probe for more information, FHFA OIG spokeswoman Kristine Belisle said: “FHFA-OIG did restructure FHFA-OIG to increase its oversight, efficiency and its results for the American people. Prior to IG Wertheimer’s arrival the average cost of production for an evaluation report (based on dedicated staff time) was $213,222 while the average cost of an audit report was $580,095; and under the previous leadership nine audit reports were cancelled which had already run up a total cost of more than $3.5 million. This was alarming data. Further, the Office of Audit was the only operational division that had a net negative return on investment. Since the restructuring, we have recruited and appointed two highly regarded audit executives with over 70 years of experience within the Inspector General Community, and re-focused the Office of Audits and all operational offices to concentrate on risked based oversight, which has already resulted in numerous reports identifying significant issues facing the FHFA and the Enterprises. The restructuring also resulted in a newly created Office of Compliance and Special Projects which holds FHFA accountable for the implementation of previously issued OIG recommendations and undertakes special projects, such as the recent Management Alert concerning the cost of Fannie Mae’s new headquarters. Finally, the restructuring of this OIG resulted in streamlining the overall budget and cutting costs and expenditures that were frivolous and wasteful—two things that are the antithesis of how an OIG should operate. The results under current leadership, which we strongly stand behind, are a more efficient and effective IG office which has produced 31 reports thus far providing critical oversight identifying issues impacting federal housing finance, and investigations that have criminal monetary results of over $668 million and civil monetary results of $8.2 billion.”