GSEs Spend $600K at MBA Convention Prompting OIG Review

This is the third of three evaluationrnreports released today by the Federal Housing Finance Agency’s (FHFA) Office ofrnInspector General (OIG) regarding the oversight of activities of the governmentrnsponsored enterprises (GSEs) Fannie Mae and Freddie Mac by FHFA.  This evaluation concerns the GSEsrnparticipation in the 2011 Mortgage Bankers Association (MBA) Convention andrnExposition.</p

MBA’s event was held at the HyattrnRegency Hotel in Chicago from October 9 to 12, 2011.  The annual convention was attended by aboutrn3000 executives who work in mortgage finance including senior managers fromrnmajor lenders, full service mortgage companies and mortgage brokers, representativesrnfrom servicing companies, state and local associations, and affordable housingrngroups.  FHFA personnel also attended atrngovernment expense.  The GSEs together<bspent over $600,000 to participate in the convention and 90 GSE employees werernregistered to attend, 48 for Fannie Mae and 42 for Freddie Mac.</p

OIG states that, while the expense ofrnthe convention was small in relation to all GSE expenses, the money expendedrndid occasion comment and prompt the office to investigate.  OIG found that the GSE’s per-capita expendituresrnfor registration, travel, and lodging were comparable to allowable expenses forrnfederal employees however it questioned the $140,000 spent to sponsor thernconvention and $140,415 for business meals and hosted dinners.</p

OIG found that FHFA did not review orrnapprove either the GSE’s participation in the Convention or the decision tornpurchase sponsorships in advance, viewing the decisions as within the authorityrndelegated by FHFA to the GSEs.  Inrnaddition to questioning sponsorship and food related expenses, OIG raisedrnissues related to the number of attendees and the value to the GSEs of theirrnparticipation. </p

In December 2011 before OIG hadrncompleted the field work for the evaluation the FHFA Acting Director issued arnletter disallowing further conference sponsorships and expenditures on food atrnbusiness meetings.  On January 25, 2012rnthe Acting Director issued an additional directive which tempered the provisionrnto allow for limited expenditures on business courtesies and expanded on otherrnaspects of the December letter.  </p

In light of this directive, OIGrnconsiders further review of the convention expenses as academic, however itrnstates that whether the issue is satisfactorily resolved will depend on the GSE’srnimplementation of the Acting Director’s guidance and OIG will monitor thernimplementation of this directive as well as the following OIG recommendations:</p<ul class="unIndentedList"