No, I Will Not Join the “Committee of 100”
Alfred Pollard, who has been General Counsel—for more than a decade--at OFHEO and now its successor the FHFA, will testify before the Senate on Thursday discussing “Powers and Structure of a Strong Regulator.”
There are a few questions I hope Mr. Pollard gets asked regarding this issue and OFHEO/FHFA’s past. His answers could help the Committee better define what they are seeking in any regulatory agency’s top law shop and GC
I am certain Mr. Pollard will mention his department’s successes, but maybe he—or the Committee—might want to highlight some possible shortcomings to strengthen the review and improvement effort.
I won’t beat a dead horse (much) but many of these questions related to incidents chronicled in Tim Howard’s book, “The Mortgage Wars.”
HUD IG Report
Specifically how did Mr. Pollard—as OFHEO’s chief legal officer---respond to a damning 2004 HUD Inspector general’s report which suggested, strongly, that OFHEO officials engaged in active efforts to drive down the price of Fannie (and Freddie) stock, out of pique over their inability to get senior GSE officials to heel?
Did he take any independent action to verify HUD’s discoveries?
Securities Fraud Claims
Did Mr. Pollard concur with the 2004 OFHEO staff finding that Fannie officials engaged in securities fraud when implementing—for the first time--the infamous Financial Accounting Standard (FAS) 133 derivative regulation, the source of the phony fraud allegations?
Was the staff report in any way a form of retaliation against Fannie Mae based on mutual hostile feelings?
(After the SEC Chief Accountant agreed with OFHEO that Fannie Mae had misapplied FAS 133, without providing any detail, nearly 300 financial services companies, including Citicorp, Bank of America and GE restated their financials because they had applied the FAS reg. much the same way Fannie Mae had.)
Auditors Announce Fannie Correct on FAS 133
Did Mr. Pollard initiate ameliorative action in 2007-- despite the initial and inaccurate OFHEO fraud claims of 2004, which hounded innocent people from responsible corporate positions--the auditing profession ruled that the FASB 133 implementation which Tim Howard had approved for Fannie in fact complied with generally accepted accounting principles (GAAP)? (This was the work OFHEO and the SEC claimed was inept and law/rule breaking.)
When Do You Stop?
Why did Mr. Pollard/OFHEO continue to pursue actions against Fannie execs Franklin Raines, Timothy Howard and Leanne Spencer into 2008, well after March 15, 2007, when OFHEO's interpretation of FAS 133 had specifically been repudiated by the Chief Accountant of the SEC, who sits on the FASB's Emerging Issues Task Force. On that date, the EITF specifically validated Fannie's original interpretation of FAS 133?
Judge Said You Wasted Taxpayers Money
Why did Mr. Pollard allow OFHEO and FHFA to waste millions in dollars in legal fees in frivolous motions to avoid disclosing documents? As noted by Judge Richard Leon, whose three opinions in 2012 quashed shareholder lawsuits based on the OFHEO report, "The discovery process was unnecessarily prolonged by OFHEO's repeated and stubborn assertion of privileges that had to be litigated up to the Court of Appeals."
About the RBC Oversight
On a less hot button note, maybe Mr. Pollard has some insight he could share about agency bureaucratic delay, expense, and—in hindsight--imprudence, when Congress gave OFHEO two years to implement a risk based capital oversight model and it takes that agency almost 10 years to comply littering the regulatory landscape with failed flotsam and jetsam. In retrospect, is that the sign of a solid agency or a woebegone one?
Sorry Senator, At This Time, I Can’t Help
Lately, I’ve been feeling pretty good at my blog’s reach, impact, and influence.
I’ve been getting 400-500 hits per blog, people have contacted me about the issues I’ve discussed, and solicited me for one type of help or another.
All in all, I figured that I’m reaching the audiences I want to reach and educate and people know where I stand.
And, then yesterday's mail came. Crash!
Warner is the Democrat half of the bipartisan Corker (R-Tenn.)-Warner mortgage reform bill sponsorship. Their bill would abolish Fannie Mae and Freddie Mac as a predicate to building their brave new mortgage finance world.
I’ve been on the sponsor’s case for weeks, mainly about their legislative proposal’s lack of details and their unyielding disdain for F&F.
I guess Warner, his personal and campaign staff, and friends don’t read my blog, or I am incapable of embarrassing this United States Senator.
Warner must have a water buffalo’s hide and is impervious to chagrin or I am lame at broadside.
I tried to hoist Warner on his own petard but only succeeded in having him ask me to be part of his “Committee of 1000” and pony up a $100 and start off his re-election campaign.
If Senator Warner shows a little humility, sensitivity, and Fannie understanding, it might cause my chilly Warner-opinions to heat up, possibly a $100 worth.
But, until I see or hear some serious Warner recanting, my “C-note” is traveling with me to the Charles Town casino.