GSEs Spend $600K at MBA Convention Prompting OIG Review

This is the third of three evaluation
reports released today by the Federal Housing Finance Agency’s (FHFA) Office of
Inspector General (OIG) regarding the oversight of activities of the government
sponsored enterprises (GSEs) Fannie Mae and Freddie Mac by FHFA.  This evaluation concerns the GSEs
participation in the 2011 Mortgage Bankers Association (MBA) Convention and
Exposition.

MBA’s event was held at the Hyatt
Regency Hotel in Chicago from October 9 to 12, 2011.  The annual convention was attended by about
3000 executives who work in mortgage finance including senior managers from
major lenders, full service mortgage companies and mortgage brokers, representatives
from servicing companies, state and local associations, and affordable housing
groups.  FHFA personnel also attended at
government expense.  The GSEs together
spent over $600,000 to participate in the convention
and 90 GSE employees were
registered to attend, 48 for Fannie Mae and 42 for Freddie Mac.

OIG states that, while the expense of
the convention was small in relation to all GSE expenses, the money expended
did occasion comment and prompt the office to investigate.  OIG found that the GSE’s per-capita expenditures
for registration, travel, and lodging were comparable to allowable expenses for
federal employees however it questioned the $140,000 spent to sponsor the
convention and $140,415 for business meals and hosted dinners.

OIG found that FHFA did not review or
approve either the GSE’s participation in the Convention or the decision to
purchase sponsorships in advance, viewing the decisions as within the authority
delegated by FHFA to the GSEs.  In
addition to questioning sponsorship and food related expenses, OIG raised
issues related to the number of attendees and the value to the GSEs of their
participation.

In December 2011 before OIG had
completed the field work for the evaluation the FHFA Acting Director issued a
letter disallowing further conference sponsorships and expenditures on food at
business meetings.  On January 25, 2012
the Acting Director issued an additional directive which tempered the provision
to allow for limited expenditures on business courtesies and expanded on other
aspects of the December letter. 

In light of this directive, OIG
considers further review of the convention expenses as academic, however it
states that whether the issue is satisfactorily resolved will depend on the GSE’s
implementation of the Acting Director’s guidance and OIG will monitor the
implementation of this directive
as well as the following OIG recommendations:

  • FHFA should
    ensure that the GSE’s conduct a comprehensive review of their travel and
    entertainment policies and revise them to be consistent with the January 25
    directive.
  • FHFA should
    review the GSE’s proposed revisions to ensure that they are drafted in a manner
    consistent with the directive and that the GSE’s have established appropriate
    controls to monitor compliance.

FHFA has concurred with the
recommendations made by OIG in this matter.

…(read more)

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