Short title

This Act may be cited as the

Fannie Mae and Freddie Mac Investigative Commission Act

Definitions and Findings

(a)

Definitions

In this Act: (1)The term Commission means the Fannie Mae and Freddie Mac Investigative Commission established under section 3. (2)The term Fannie Mae means the Federal National Mortgage Corporation. (3)The term Freddie Mac means the Federal Home Loan Mortgage Corporation. (b)

Findings

Congress finds the following: (1)With foreclosure activity increasing 81 percent in 2008, the mortgage foreclosure crisis has triggered the Nation’s most significant economic downturn in recent history during which the stock market has dipped to record lows. While neighborhoods continue to deteriorate due to a loss of value, an estimated 8,000,000 homes are projected to enter foreclosure in the next 4 years. (2)There is a need to fully document what went wrong in the management of secondary market activities at Fannie Mae and Freddie Mac that contributed to the misguided, potentially fraudulent policies and practices that ultimately led to the Federal conservatorship of such enterprises so that similar mismanagement and risky behavior will not be repeated in the future. (3)The people of the United States have suffered tremendous harm from the irresponsible, high risk, and unregulated practices of the mortgage industry under the policies of Fannie Mae and Freddie Mac. (4)The Federal conservatorship of Fannie Mae and Freddie Mac may cost the American people hundreds of billions of dollars, likely exceeding $200,000,000,000, making it potentially the largest debt unjustly imposed on the taxpayers of the United States in our Nation’s history. (5)The American people, forced to shoulder the financial burden of the damage done to the economy of the United States, deserve to know who made the decisions that contributed to the crisis, what went wrong, and why. (6)Any executive officers and members of the boards of directors at Fannie Mae and Freddie Mac who may have exercised poor judgment, or committed wrongdoing, should be held accountable for such judgments and actions. (7)In June 2003, Freddie Mac disclosed that it had misstated its earnings by roughly $5,000,000,000 between the years 2000 and 2002 to smooth the appearance of quarterly volatility in earnings and to meet Wall Street expectations. (8)In December 2004, the Securities and Exchange Commission found that Fannie Mae had violated accounting rules and needed to restate its earnings by recording a loss of up to $9,000,000,000 from 2001 to 2004. (9)For nearly two decades the shareholders of Fannie Mae and Freddie Mac and the employees and directors of the boards of these enterprises have enjoyed large dividends, bonuses, salaries, and other compensation based on policies and practices that may have been misguided or fraudulent. (10)In 2007, former Freddie Mac Chairman and Chief Executive Richard Syron received millions of dollars in compensation, despite the fact that the enterprise’s stock lost half its value. (11)In 2007, former Fannie Mae President and Chief Executive Daniel Mudd received millions of dollars in compensation. (12)Previous investigations of Fannie Mae and Freddie Mac have focused on accounting fraud, but there have not been any investigations on the full range of policies, practices, and high risk board decisions that contributed to and exacerbated our Nation's housing crisis. (13)According to the Office of Federal Housing Enterprise Oversight, regulation allowed Freddie Mac and Fannie Mae to operate with just $83.2 billion of capital at the end of 2007, even though it supported $5.2 trillion of debt and guarantees. (14)The boards of directors of Fannie Mae and Freddie Mac have been held harmless throughout the Nation's housing crisis, despite having the authority to create and influence many of the policies of such enterprises. (15)The involvement of the boards of directors in the policies of Fannie Mae and Freddie Mac has been shrouded in secrecy, as their policymaking decisions have not been publicly disclosed, despite the public protections and public benefits their enterprises receive.

Establishment

There is established a commission to be known as the Fannie Mae and Freddie Mac Investigative Commission.

Duty of the Commission

(a)

In general

The Commission shall investigate, determine, and make recommendations to Congress with respect to the policies, practices, and board decisions of Fannie Mae and Freddie Mac subsequent to the actions of the Resolution Trust Corporation during the late 1980s and from the 1990s through the present that led to the enterprises’ financial instability and the subsequent Federal conservatorship of such enterprises. (b)

Specific topics

In carrying out its duty under subsection (a), the Commission shall address and analyze, by year, beginning in 1990 and through the present, the following: (1)The appropriate role of Fannie Mae and Freddie Mac in expanding homeownership and the appropriate role in helping the housing market recover nationwide. (2)Fannie Mae and Freddie Mac’s involvement, if any, in the development of faulty risk standards and accounting practices and the creation and proliferation of the securitized mortgage instrument, and how such instrument affected the solvency of such enterprises. (3)The role of the boards of directors of Fannie Mae and Freddie Mac in developing and voting for the investment, accounting, and contracting policies of such enterprises, particularly as they relate to risk assessments, subprime mortgages, and the international securitization of mortgages. (4)Any board members, working committees, or executive officers responsible for making the decisions to adapt or change risk assessments or grow Fannie Mae and Freddie Mac’s portfolios of subprime mortgage loans, a summary of actual board votes on the same, and the process that led to such decisions. (5)The decisions of the boards or executive officers of Fannie Mae and Freddie Mac that contributed or may have contributed to the overvaluation of risky mortgage investments in the stock market and, later, to the growth of the subprime mortgage industry. (6)The annual compensation, including all forms of compensation, stock options, and other financial benefits accrued to each of Fannie Mae and Freddie Mac's executive officers and members of the boards of directors. (7)Such other matters that the Congress may place before the Commission.

Membership

(a)

Number and appointment

(1)

In general

The Commission shall be composed of 8 members, appointed as follows: (A)Two members appointed by the Speaker of the House of Representatives. (B)Two members appointed by the minority leader of the House of Representatives. (C)Two members appointed by the majority leader of the Senate. (D)Two members appointed by the minority leader of the Senate. (2)

Qualifications

Members of the Commission shall be individuals who are of recognized standing and distinction in the areas of banking, securities, and finance regulation, consumer advocacy and fair housing programs, and in the mortgage industry. (3)

Conflict of interest

Members of the Commission shall not have a conflict of interest that is relevant to any matter the Commission is required to investigate under section 4. (4)

Deadline for appointment

Members of the Commission shall be appointed not later than 90 days after the date of enactment of this Act. (5)

Chairperson

The Chairperson of the Commission shall be designated by the Speaker of the House of Representatives at the time of appointment. (b)

Terms

(1)

In general

Each member shall be appointed for the life of the Commission. (2)

Vacancies

A vacancy on the Commission shall— (A)not affect the power of the remaining members to execute the duty of the Commission; and (B)be filled in the manner in which the original appointment was made. (c)

Compensation

(1)

Rates of Pay; Travel Expenses

Each member shall serve without pay, except that each member shall receive travel expenses, including per diem in lieu of subsistence, in accordance with applicable provisions under subchapter I of chapter 57 of title 5, United States Code. (2)

Prohibition of Compensation of Federal Employees

Notwithstanding paragraph (1), any member of the Commission who is a full-time officer or employee of the United States may not receive additional pay, allowances, or benefits because of service on the Commission. (d)

Meeting requirements

(1)

Frequency

(A)

Quarterly meetings

The Commission shall meet at least quarterly. (B)

Additional meetings

In addition to quarterly meetings, the Commission shall meet at the call of the Chairperson or a majority of its members. (2)

Quorum

Five members of the Commission shall constitute a quorum, but a lesser number may hold hearings. (3)

Meeting by telephone or other appropriate technology

Members of the Commission are permitted to meet using telephones or other suitable telecommunications technologies provided that all members of the Commission can fully communicate with all other members simultaneously.

Director and Staff of Commission; Experts and Consultants

(a)

Director

(1)

Appointment

The Commission shall have a Director who shall be appointed by the Chairperson with the approval of the Commission. (2)

Credentials

The Director shall have experience in the areas of banking, securities, and finance regulation, specifically in the mortgage industry, consumer advocacy, and fair housing programs. (3)

Salary

The Director shall be paid at a rate determined by the Chairperson with the approval of the Commission, except that such rate may not exceed the rate of basic pay for GS–15 of the General Schedule. (b)

Staff

With the approval of the Chairperson, the Director may appoint and fix the pay of additional qualified personnel as the Director considers appropriate. (c)

Experts and consultants

With the approval of the Commission, the Director may procure temporary and intermittent services under section 3109(b) of title 5, United States Code, but at rates for individuals not to exceed the daily equivalent of the maximum annual rate of basic pay for GS–15 of the General Schedule. (d)

Staff of Federal Agencies

Upon request of the Commission, Chairperson, or Director, the head of any Federal department or agency may detail, on a nonreimbursable basis, any of the personnel of that department or agency to the Commission to assist the Commission in carrying out its duty under this Act.

Powers of Commission

(a)

Hearings and sessions

The Commission may, for the purposes of carrying out this Act, hold hearings, sit and act at such times and such places, take testimony, and receive evidence as the Commission considers appropriate. (b)

Subpoena power

(1)

In general

The Commission may issue a subpoena to require the attendance and testimony of witnesses and the production of evidence relating to any matter under investigation by the Commission. (2)

Issuance and signature

Subpoenas issued under paragraph (1) shall bear the signature of the Chairperson of the Commission and shall be served by any person or class of persons designated by the Chairperson for that purpose. (3)

Enforcement

If a person refuses to obey a subpoena issued under paragraph (1), the Commission may apply to a United States district court for an order requiring that person to appear before the Commission to give testimony, produce evidence, or both, relating to the matter under investigation. The application may be made within the judicial district where the hearing is conducted or where that person is found, resides, or transacts business. Any failure to obey the order of the court may be punished by the court as civil contempt. (c)

Powers of Members and agents

Any member or agent of the Commission may, if authorized by the Commission, take any action which the Commission is authorized to take under this Act. (d)

Obtaining official data

The Commission may secure directly from any department or agency of the United States information necessary to enable it to carry out its duty under this Act. Upon request of the Chairperson, the head of that department or agency shall furnish that information to the Commission. (e)

Physical facilities and equipment

The Architect of the Capitol, in consultation with the appropriate entities in the legislative branch, shall locate and provide suitable facilities and equipment for the operation of the Commission on a nonreimbursable basis. (f)

Administrative support services

Upon request of the Commission, the Architect of the Capitol and the Administrator of the General Services shall provide to the Commission on a nonreimbursable basis such administrative support services as the Commission may request in order for the Commission to carry out its duty under this Act. (g)

Bylaws, rules, and regulations

The Commission may adopt, amend, and repeal bylaws, rules, and regulations governing the conduct of its business and the performance of its duties. (h)

Commission Records

The Commission shall keep accurate and complete records of its doings and transactions which shall be made available for public inspection, and for the purpose of audit and examination by the Comptroller General or his designee.

Information from Freddie Mac, Fannie Mae, and the FHFA

(a)

Enterprises

Fannie Mae and Freddie Mac shall provide full and prompt access to the Commission to any books, records, and other information requested for the purposes of carrying out its duty under this Act. (b)

FHFA

Upon request of the Commission, the Director of the Federal Housing Finance Agency shall provide access to any information necessary to assist the Commission in carrying out its duty under this Act.

Report

Not later than 12 months after the date on which all initial members are appointed, the Commission shall submit to Congress a final report containing a detailed statement of the findings, conclusions, and recommendations of the Commission.

10.

Authorization of appropriations

There are authorized to be appropriated to the Commission such sums as may be necessary for fiscal year 2010 to carry out this Act.

11.

Termination

The Commission shall terminate following the submission and presentation of its final report and recommendations under section 9, but not later than 30 days after such submission and presentation.