Report finds federal housing agency official ‘abused her authority’

An independent investigation by the committee of inspectors general has concluded in a scathing report that Laura Wertheimer, the inspector general of the Federal Housing Finance Agency (FHFA), “abused her authority” and undermined the integrity of her office by retaliating against employees who cooperated with a congressional investigation.

The Integrity Committee, as the special panel is known, found that Wertheimer, who was appointed by then-President Obama in 2014, created and fostered “a culture of abuse and intimidation for her staff” focused on employees who cooperated with a congressional oversight investigation.

The allegations stem from a Republican investigation into whether Wertheimer sought to hamstring audits of the Federal Housing Finance Agency at the behest of its former director, Mel Watt, who was also appointed by Obama in 2014.

The committee’s report recommends that Wertheimer’s actions warrant “consideration of substantial disciplinary action, up to and including removal.”

The previously unpublicized report was presented in a 29-page letter to Biden dated April 14 and signed by Kevin H. Winters, the chairperson of the Integrity Committee.

Sens. Chuck Grassley (R-Iowa) and Ron Johnson (R-Wis.), who have been looking into alleged intimidation of employees inside the FHFA’s office of inspector general as far back as 2016, on Wednesday called on President Biden to fire Wertheimer, citing the Integrity Committee report.

“IG Wertheimer has failed to meet the duties described by the IG Act. Her behavior certainly falls far short of your calls for unity, transparency, and integrity,” they wrote in a Wednesday letter to Biden.

“To put it mildly, the only thing this watchdog appears to hunt is her own employees. She should be removed from office, in a manner consistent with applicable statutory notification requirements,” they wrote.

Grassley and Johnson had received multiple complaints about the FHFA’s inspector general’s office from 2015 to 2017 and requested that Wertheimer produce information about personal reductions in her office.

Emmet Flood, an attorney at Williams & Connolly LLP who is representing Wertheimer, said Grassley and Johnson were misrepresenting the report.  

“In more than 25 years in Washington, I have never once commented for the record about any of my matters,” Flood wrote.

“I’m making an exception for this case because it’s a late hit after the whistle: Far from supporting the notion that there was a culture of intimidation or retaliation against witnesses, the investigative report did not find that even a single witness had declined to cooperate out of intimidation or fear.  And it expressly says that ‘it did not find evidence of actual retaliation.’” Flood stated. 

“Inspector General Wertheimer has been a superlative IG and members of her oversight committee have commended her for her frankness, courage and service.  She and her staff were awarded the 2019 CIGIE Government Ethics Award for Excellence. Anyone with an interest in her performance as IG can consult the FHFA-OIG website, where the record of her team’s accomplishments is public, extensive and incontestable.”

As early as 2016, Grassley, who was then chairman of the Senate Judiciary Committee, and Johnson, then-chairman of the Homeland Security Committee, sought more information from Wertheimer’s office about its financing, hiring and firing practices, and internal organization.

The FHFA’s office of inspector general was established in 2010 to oversee the federal government’s conservatorship of Fannie Mae and Freddie Mac and regulate Federal Home Loan Banks.

Critics of the FHFA suspected that Wertheimer may had acted under pressure from Watt to weaken the oversight activities of the agency’s office of inspector general.

Beginning in 2017, the committee received multiple complaints alleging that Wertheimer and her inner circle “had grossly mismanaged” audits within her office by implementing “coercive personnel actions and created a culture of retaliation and abuse,” according to the Integrity Committee report.

Specifically, the report found that Wertheimer and a senior employee imposed on auditors within her office “an unachievable performance standard” that was “designed, sequenced and intended to coerce targeted auditors to accept” buyouts.

The report also found that Wertheimer “failed to resist or report to Congress threats by the FHFA director to cut the OIG’s budget and reduce the OIG’s staff and resources,” referring to Watt.

When the council of inspectors general and Senate Republicans tried to investigate the allegations, Wertheimer obstructed those efforts and intimidated employees who cooperated or might have thought about cooperating.

The report found that Wertheimer and her staff “refused to turn over certain documents to IC investigators and refused to make a key relevant witness … available to an interview.”

Witnesses told Integrity Committee investigators that Wertheimer referred to employees who were interviewed by congressional staff as “Boris and Natasha,” the spy villains of the “Rocky and Bullwinkle.” Wertheimer initially denied to investigators that she called her staffers by the nicknames but later admitted that she “may” have done so, and subsequently admitted she was “sure” she had in fact called them those names.

She also referred to one of the employees who cooperated with congressional oversight as a “weasel” in front of other staff and purchased and distributed to her office a children’s book titled “Weasels.” 

The IC report stated that “multiple witnesses reported that IG Wertheimer’s disparaging comments had a chilling effect on the willingness of her employees to cooperate with the IC’s investigation.”

It also found that Wertheimer and several of her colleagues “abused their authority when they continually denied IC investigators full access” to personnel and documents, “thereby impeding the IC’s investigation.” 

It highlighted what it called “Wertheimer’s inappropriate involvement in the investigation” and found she “further abused her authority” by actively participating in decisions within her office on cooperating with the IC’s investigation.

The report asserted that Wertheimer had “no supportable basis to withhold evidence” from its investigators and her claim of an attorney-client relationship with her own chief counsel exempted it from investigation was “wholly without merit.” 

The IC said it was unable to compile a complete picture of the facts related to Wertheimer’s conduct because she had “exhibited a lack of cooperation and engaged in conduct undermining the integrity reasonably expected of an IG.”

Johnson on Wednesday expressed frustration that it took nearly four years for the committee of inspectors general to issue its findings. 

“It’s absolutely amazing. This is government bureaucracy [in] complete dysfunction,” he said. 

“All I know is this person should not be an inspector general. That’s pretty clear cut,” he added, expressing frustration that Wertheimer stayed in her job during the investigation. 

Updated at 9:07 p.m.