WASHINGTON — As the House Financial Services Committee prepares to hold a hearing Thursday on oversight of the Federal Housing Finance Agency, the exact focus of the hearing remains somewhat in flux.
The committee’s official announcement of the hearing suggested that it would look at the agency’s role as conservator for Fannie Mae and Freddie Mac. The hearing notice referred to allegations of “waste, fraud and abuse” at the FHFA and the two mortgage giants.
“Specifically, the committee will examine FHFA’s policies and procedures used to supervise Fannie Mae and Freddie Mac, the FHFA’s structure and the need to reform the housing finance system in the United States,” the majority staff on the committee wrote in a memo to committee members Sept. 24.
But the timing of the hearing, as FHFA Director Mel Watt faces an employee’s allegations of sexual harassment, has led many to believe that the investigation of his alleged conduct will be a central component of the hearing. That was bolstered by revelations Wednesday that his accuser, Simone Grimes, had been invited by the committee to testify. The hearing is also set to take place on the same day that the Senate Judiciary Committee plans to hold a hearing looking at sexual misconduct allegations against Supreme Court nominee Brett Kavanaugh.
The official docket lists four witnesses for the hearing: Watt, FHFA Inspector General Laura Wertheimer, Fannie CEO Timothy Mayopoulos and Freddie CEO Don Layton.
However, the attorney for Grimes, who alleges that Watt denied her a pay raise after she refused his advances, told American Banker that Rep. Maxine Waters, the ranking Democrat on the committee, has expressed interest in having Grimes testify. The staff for both Waters and Chairman Jeb Hensarling have been in contact with Grimes about the possibility of adding her as a witness.
Observers said it is unclear what lawmakers hope to gain from the proceeding.
“There’s not a variety of outsiders, there’s not a bunch of written materials that have been submitted in advance, there’s not a particular question or controversial question that’s being made and so to me it looks like more like a pro forma meeting where not a lot of things are going to happen,” said Laurence Platt, a partner at the law firm Mayer Brown.
Here are five questions to consider about the hearing:
How much of the hearing will be devoted to the Watt harassment probe?
The committee announced the hearing about two weeks after Politico first reported that Watt was under investigation for allegedly making inappropriate advances toward Grimes.
Lawmakers on the committee might be hesitant to accuse Watt of anything outright. Watt himself was a Democratic congressman from 1993 to 2014, representing North Carolina’s 12th district.
“This is something that hits close to home, because this is a former colleague of ours who we have served with,” Hensarling said in a recent briefing with reporters. “The individual allegations dealing with Mr. Watt, again that’s not our primary responsibility, but we want to ensure that they are thoroughly and fairly investigated.”
Mark Zandi, the chief economist of Moody’s Analytics, said the topic is bound to be “pretty awkward” for lawmakers, but is also “the elephant in the room.”
“I suspect that someone might venture there, although it’s a charged end,” he said. “You’ve got the Kavanaugh hearing, so that may have some impact on this hearing as well, depending on how the questioning goes.”