Grassley, Johnson call for removal of housing regulator watchdog

Senate Republicans are calling on the White House to fire the top watchdog for a federal housing regulator after investigators found that she and two deputies abused their authority.

Laura Wertheimer, inspector general for the Federal Housing Finance Agency, which supervises mortgage finance giants Fannie Mae and Freddie Mac, allegedly disparaged employees and sought to intimidate whistleblowers, an investigation by an oversight panel found. She has faced multiple federal investigations for years by a council of other inspectors general, the Office of Special Counsel and Congress.

“To put it mildly, the only thing this watchdog appears to hunt is her own employees,” Sens. Chuck Grassley (R-Iowa) and Ron Johnson (R-Wis.), the top Republicans on the Senate Judiciary Committee and the Permanent Subcommittee on Investigations, said in a letter to President Joe Biden Wednesday.

“She should be removed from office, in a manner consistent with applicable statutory notification requirement,” they added. Only the president has the power to remove an inspector general.

The Council of the Inspectors General on Integrity and Efficiency, which oversees federal watchdogs across government agencies, concluded a three-year investigation and reported its findings to the White House earlier this month. It recommended “substantial disciplinary action, up to and including removal." POLITICO reported on the existence of the investigation in 2018.

The probe found that two other top officials at the Office of Inspector General for the FHFA — Chief Counsel Leonard DePasquale and Acting Deputy IG for Investigations Richard Parker — also abused their authority by repeatedly stonewalling investigators.

Their refusal to turn over evidence and make DePasquale available for an interview constituted an “unprecedented impediment” to the council's investigation and prevented it from getting a complete record of the facts, said Kevin Winters, chair of the CIGIE Integrity Committee, in a letter detailing the findings to Biden.

The committee “finds that IG Wertheimer showed a disdain and resistance towards Congress and IC oversight by fostering a culture of witness intimidation through a pattern of staff abuse and fear of retaliation,” Winters wrote.

Wertheimer nicknamed two employees who’d been interviewed by Congress “Boris and Natasha” after the villains of "Rocky and Bullwinkle," according to the report, with one witness stating it was because they were deemed insufficiently loyal to her.

In interviews with investigators, Wertheimer at first denied using the nickname before conceding that she had done so because she believed one of the employees was trying to “find ways to blow up the organization.” She had also called that employee a “weasel” in front of other staff and, when the name took off among senior employees, ordered and passed around the children’s book “Weasels.” She told investigators that the employee in question was “duplicitous” and “treacherous.”

Emmet Flood, the former Trump White House counsel who is now representing Wertheimer, called her a “superlative IG” in an email to POLITICO.

“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,” he said. “And it expressly says that ‘it did not find evidence of actual retaliation.’”

According to the council's report, investigators did not find evidence of "actual retaliation." But the probe found that witnesses understood comments by Wertheimer and DePasquale "to be a thinly veiled threat” about cooperating with the investigations.

DePasquale and Parker did not immediately respond to requests for comment.

Flood noted that the investigative council had given the FHFA inspector general office a Government Ethics Award for Excellence in 2019 for its investigation of misconduct allegations against former FHFA Director Mel Watt.

Inspectors general report to Congress and have a duty to alert lawmakers to any agency attempts to pressure them. IGs are charged with investigating government waste, fraud and abuse and are supposed to be independent of the agencies they oversee. In the FHFA’s case, the Office of Inspector General is responsible for risk assessments of Fannie and Freddie, the taxpayer-backed mortgage giants standing behind about half of the $11 trillion mortgage market.

Grassley and Johnson began investigating whistleblower allegations about Wertheimer in October 2015, a little over a year after she’d been confirmed by the Senate for the position. They praised the whistleblowers in their letter Wednesday.

“Their testimony, evidence, and dedication throughout this unreasonable five-year ordeal was pivotal in discovering much of what has now been confirmed by the [CIGIE Integrity Committee],” the senators said in their letter to Biden. “In short, without these whistleblowers, this IG’s abhorrent behavior would have likely gone unnoticed.”