oversight

FHFA's Oversight of Derivative Counterparty Risk

Published by the Federal Housing Finance Agency, Office of Inspector General on 2013-11-20.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                Federal Housing Finance Agency
                    Office of Inspector General




       FHFA’s Oversight of Derivative
           Counterparty Risk




Evaluation Survey Report  ESR-2014-001  November 20, 2013
                                       November 20, 2013


TO:            Jon Greenlee, Deputy Director, Division of Enterprise Regulation


FROM:          David M. Frost, Acting Deputy Inspector General for Evaluations


SUBJECT:       FHFA’s Oversight of Derivative Counterparty Risk (ESR-2014-001)


Objective

The purpose of this evaluation is to assess the Federal Housing Finance Agency’s (FHFA)
oversight of the Federal National Mortgage Association’s (Fannie Mae) and the Federal Home
Loan Mortgage Corporation’s (Freddie Mac) (collectively, the Enterprises) management of
counterparty risk associated with their investments in derivatives.

Overview

This report closes the evaluation by the FHFA Office of Inspector General (OIG) of FHFA’s
oversight of the Enterprises’ management of derivative counterparty risk. In addition to
surveying FHFA’s oversight of the Enterprises’ management of derivative counterparty risk
generally, OIG focused on FHFA’s supervision of the Enterprises’ implementation of the central
clearing mandate under Title VII of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (Dodd-Frank).

OIG considered FHFA’s oversight of the Enterprises’ management of derivative counterparty
risk in conjunction with the mitigation of that risk resulting from the implementation of Dodd-
Frank’s central clearing mandate. OIG concluded that FHFA’s oversight of the Enterprises’
management of this risk is such that, although still a concern, no additional study of this topic is
needed. However, OIG will continue to monitor the situation and initiate additional work on this
topic if necessary.

At the same time, OIG found that FHFA’s oversight of its regulated entities’ implementation of
Dodd-Frank was not uniformly applied. In particular, OIG found that, in contrast to its oversight
of the Federal Home Loan Banks (FHLBanks), FHFA did not issue to the Enterprises an
Advisory Bulletin providing regulatory guidance regarding the implementation of Dodd-Frank.



   Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
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OIG recommends that FHFA’s Advisory Bulletins that provide guidance regarding
implementation of critical regulatory changes be issued to all the impacted regulated entities.
This would further regulatory consistency in FHFA’s oversight practices of its safety and
soundness mission.



cc:       Edward DeMarco, Acting Director
          Rick Hornsby, Chief Operating Officer
          John Major, Manager, Internal Controls and Audit Follow-Up




      Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
                                                   2
Background

Introduction
On July 30, 2008, the Housing and Economic Recovery Act (HERA) established FHFA as the
regulator of the Enterprises and the Federal Home Loan Bank System.1 As regulator, FHFA is
responsible for overseeing the safety and soundness of the regulated entities, supervising their
efforts to support housing finance and affordable housing goals, and facilitating a stable and
liquid mortgage market. Further, on September 6, 2008, FHFA became the Enterprises’
conservator. As conservator, FHFA has the statutory authority to preserve and conserve assets
of the Enterprises and to take necessary action to
put them in a safe and sound condition.2
                                                                Interest rate risk is the risk of loss
The Enterprises’ combined capital markets                       that financial institutions face due to
businesses, which include their funding, hedging,               fluctuations in prevailing interest
and investment activities, manage more than $1                  rates. As holders of fixed-rate
trillion of mortgage related assets. Their capital              mortgage assets that are funded with
markets portfolios have certain characteristics that            debt, the Enterprises face two forms
are similar to those of a hedge fund and, like a                of interest rate risk. First, the
hedge fund, they may sustain significant financial              Enterprises risk incurring losses if the
losses. Accordingly, although the Enterprises’                  rate of interest paid on their debt
capital markets businesses have generally been                  obligations rises to the level of, or
profitable, certain elements have incurred tens of              exceeds the rate of, interest earned
billions of dollars in losses since the Enterprises             on their fixed-rate mortgage assets.
entered into conservatorship. For this reason, the              Second, the Enterprises risk incurring
OIG initiated a series of evaluations relating to               losses if general mortgage rates
FHFA’s supervision of the Enterprises’ capital                  decline and borrowers refinance their
markets businesses.3                                            loans. By refinancing their mortgages,
                                                                borrowers prepay their existing loan
Among the Enterprises’ capital markets activities,              and cause a decline in the revenue
the Enterprises enter into a variety of complex                 and income the Enterprises receive
financial instruments known as derivatives                      from their mortgage assets. The
contracts. A derivative contract is, essentially,               latter form of interest rate risk is also
an agreement providing parties to the agreement                 referred to as prepayment risk.

1
    Pub. L. No. 110-289, § 1101, 122 Stat. 2661.
2
    12 U.S.C. § 4617.
3
  See OIG, FHFA’s Oversight of Capital Markets Human Capital, ESR-2013-007 (Aug. 2, 2013) (online at:
http://www.fhfaoig.gov/Content/Files/ESR-2013-007.pdf); OIG, Case Study: Freddie Mac’s Unsecured Lending to
Lehman Brothers Prior to Lehman Brothers’ Bankruptcy, EVL-2013-03 (Mar. 14, 2013) (online at:
http://www.fhfaoig.gov/Content/Files/EVL-2013-03_1.pdf); See OIG, The Housing Government-Sponsored
Enterprises’ Challenges in Managing Interest Rate Risks, WPR-2013-01 (Mar. 11, 2013) (online at:
http://www.fhfaoig.gov/Content/Files/WPR-2013-01_2.pdf); OIG, FHFA’s Oversight of Freddie Mac’s Investment
in Inverse Floaters, EVL-2012-009 (Sep. 26, 2012) (online at: http://www.fhfaoig.gov/Content/Files/EVL-2012-
009.pdf).




     Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
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with the obligation or the choice to buy, sell, or exchange something at a future date. Among
other reasons, the Enterprises employ derivatives to manage the interest rate and prepayment
risks associated with their mortgage assets by transferring these risks to their counterparties,
such as investment and commercial banks.4

For example, to hedge against the risk of rising
short-term interest rates, the Enterprises generally                    Interest rate swaps are derivatives
use interest rate swaps under which they trade the                      in which counterparties agree to
fixed-rate interest payments characteristic of                          exchange interest payments on a
mortgage loans for floating-rate interest payments                      predetermined amount of principal
that correspond more closely to their short-term                        (“notional amount”) for an agreed-
borrowing costs. Thus, if an Enterprise’s mortgage                      upon period. The amount of each
portfolio is situated such that an increase in short-                   party’s payment is the agreed-upon
term interest rates from 5% to 7% would yield a                         interest rate multiplied by the
$1,000,000 loss, then the Enterprise could invest in                    notional amount. One party pays
interest rate swaps that would return a $1,000,000                      their counterparty a floating rate of
profit from the same increase in interest rates. By                     interest (“reference rate”) typically
essentially transforming the fixed-rate interest                        based on an index of short-term rates.
payments received on their mortgage assets into                         In return, their counterparty pays a
floating-rate interest payments, the Enterprises                        fixed rate of interest for the life of the
mitigate the risk that their investment portfolio will                  swap.
lose value as interest rates fluctuate.5

Counterparty Risk
Derivatives are binding contracts between the Enterprises and their counterparties. To
effectively manage their financial risks, the Enterprises depend on the ability of their derivatives
counterparties to meet their obligations throughout the lifespan of the agreement. However, as
with all contractual agreements, the Enterprises bear the risk of their counterparty’s default. The
risk of a counterparty default is referred to as counterparty credit risk or, simply, counterparty
risk.

For an Enterprise, a derivative counterparty’s default will result in a loss if the Enterprise is
unable to find a suitable replacement contract at an optimal price (or the collateral held by
the Enterprise cannot be liquidated at a price that is sufficient to cover the full amount of the
derivative exposure). For example, the default of a counterparty to an Enterprise interest rate
swap exposes the Enterprise to losses stemming from future fluctuations in interest rates. To



4
  For more information on the Enterprises management of interest rate risk, see OIG, The Housing Government-
Sponsored Enterprises’ Challenges in Managing Interest Rate Risks, WPR-2013-01 (Mar. 11, 2013) (online at:
http://www.fhfaoig.gov/Content/Files/WPR-2013-01_2.pdf).
5
  In effect, the purchase of the swap would leave the GSE in a neutral position with respect to the fluctuation in
interest rates, minus the cost of the hedge.




    Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
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cover that exposure, the Enterprise may have to execute a replacement interest rate swap with a
third party, if available, at a higher price.6

Derivative Market Structure
Derivatives are traded on two markets: exchanges and over-the-counter (OTC).

Exchanges are centralized markets where all the
buying and selling interests of standardized                       A clearinghouse is an organization that
derivative instruments (e.g., futures) come                        acts as a central counterparty for a
together. Trading data is reported throughout the                  group of buyers and sellers that trade
day. To mitigate counterparty risk, trades of                      amongst themselves. Essentially, the
these standardized derivatives are settled and                     clearinghouse interposes itself between
centrally cleared through, what is often, an                       counterparties to trades and becomes
exchange-owned or affiliated clearinghouse.                        the buyer to every seller and the seller
                                                                   to every buyer. Clearinghouses employ
Central features of this market are clearinghouse                  a variety of safeguards and risk
netting arrangements and collateral requirements.                  management practices to ensure
Netting is a method of reducing risk by                            that trade obligations are satisfied.
combining two or more obligations of a clearing
                                                                   Examples are capital requirements for
member to a net obligation. This allows the
                                                                   clearing members, multi-lateral netting
clearinghouse to use debt owed to a failed
                                                                   arrangements, initial and daily
member to repay debts owed by that member.
                                                                   collaterization requirements, a series
Collateral requirements refer to the obligations
                                                                   of default funds, and credit lines. By
of parties to an agreement to deposit collateral
                                                                   replacing the credit risk of individual
(initial margin) as a performance bond when
                                                                   counterparties with the institutional
entering into a trade. Additionally, at the end
                                                                   credit risk of the clearinghouse itself,
of each trading day, all contracts are re-priced
                                                                   clearinghouses mitigate counterparty
to reflect movements in the parties’ positions.
                                                                   risk.
Parties who lose money because prices moved
against them must post additional collateral
(variation margin) to cover those losses or otherwise close their positions. Depending on the
nature of the derivatives, exchanges and clearing entities are overseen by the Commodity Futures
Trading Commission (CFTC) and the Securities and Exchange Commission.

Trading of OTC derivatives, on the other hand, is done on a bilateral basis (i.e., directly between
a buyer and seller) with customized terms (e.g., collateral requirements) reflecting the needs of
the particular buyer and seller. Prior to Dodd-Frank, OTC derivatives users were not required to
disclose to regulators the price, terms, or even the existence of an agreement, nor was there a
central clearing requirement. The International Swaps and Derivatives Association published
best practices standards for the industry, but compliance with those standards is voluntary.


6
  Additionally, the Enterprise may suffer losses if a counterparty becomes insolvent and the Enterprise is unable to
recover collateral that it posted or collect any termination payment that may have been due.




    Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
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Although not the direct cause of the recent financial
crisis, the role that OTC derivatives played in                           Case Study: Lehman Brothers was a
exacerbating its effects demonstrated the need for                        global financial services firm that
increased regulation of the OTC market.7 On                               failed in Sept. 2008. Lehman’s
July 21, 2010, Dodd-Frank was signed into law.8                           failure resulted in its default on
Dodd-Frank’s stated purpose is to promote the                             $9 trillion (notional) of outstanding
financial stability of the United States; it represents a                 interest rate swaps (comprising over
comprehensive overhaul of the financial regulatory                        66,000 trades) held by LCH.Clearnet
regime on a scale not seen since the reforms that                         (a leading clearinghouse). Within
followed the Great Depression. In particular, Title                       several weeks, LCH.Clearnet
VII of Dodd-Frank established a statutory framework                       successfully closed out its positions
designed, in part, to reduce risk and increase                            without using the entire margin it
transparency in the OTC derivatives markets. It does                      had available to support the post-
this by, among other things, mandating that many                          default process and at no loss to
OTC derivatives be centrally cleared with pricing                         other market participants.
transparent to participants.9

Not all OTC derivatives, however, are clearable. For example, presently, certain OTC
derivatives used by the Enterprises, such as interest rate “swaptions” (derivatives where the
purchaser buys an option to enter into an interest rate swap), fail to meet the eligibility
requirements of clearinghouses. To mitigate risk associated with non-cleared OTC derivatives,
Dodd-Frank grants financial regulators the authority to impose initial and variation margin
requirements on them as well.

The Enterprises’ Management of Derivative Counterparty Risk
The Enterprises’ derivatives include exchange traded and OTC (cleared and non-cleared)
instruments with a combined notional value of over $1.6 trillion.10 The Enterprises derivatives
are, mostly, clearable interest rate related swaps.

7
 In 2000, Congress passed the Commodity Futures Modernization Act (CFMA). CFMA, in part, provided the SEC
with anti-fraud authority over “security-based swap agreements.” However, CFMA prohibited the SEC from,
among other things, imposing reporting, recordkeeping, or disclosure requirements or other prophylactic measures
designed to prevent fraud with respect to such agreements.
8
    The Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010).
9
  As noted, a clearinghouse replaces the credit risk of individual counterparties with the institutional credit risk of
the clearinghouse itself. As the counterparty to all the trades it clears, the failure of a clearinghouse may have
systemic implications. Consequently, in Title VIII of Dodd-Frank, Congress recognized that financial market
utilities (FMUs), such as qualified clearinghouses, may also concentrate and create new risks. In part to reduce
systemic risk and support the broader financial system, Congress enhanced the regulation and supervision of
systemically important FMUs. Furthermore, under terms set by the Board of Governors of the Federal Reserve
Board and subject to authorization by the Board in consultation with the Secretary of the Treasury, systemically
important FMUs could be given access to emergency credit from the Federal Reserve’s discount window.
10
   Pursuant to the 2012 Amendments to the Senior Preferred Stock Purchase Agreements (PSPAs), the Enterprises
are required to reduce their portfolios of mortgage related assets (retained portfolios) by 15% annually (until they



     Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
                                                            6
            Figure 1. 2012 Financial Derivatives—Notional Amount Outstanding ($ millions)




                                                       $745,831
                                  $861,011                                  Freddie Mac
                                                                            Fannie Mae




As noted, the Enterprises are exposed to counterparty risk by their use of derivative instruments.
In particular, the Enterprises’ use of uncleared OTC derivatives (e.g., interest rate swaptions)
exposes them to the credit risk of their individual OTC counterparties in the event that the
counterparty fails to meet its obligations.

To mitigate this risk, the Enterprises typically enter into master netting and collateral agreements
with their OTC counterparties. When an Enterprise’s net position in an OTC derivative has a
market value above zero, the master agreement requires the counterparty to deliver high-quality,
liquid assets, such as cash or short-term Treasury obligations, as collateral in an amount equal to
that market value (typically less a small threshold). That collateral is then held for the benefit of
the Enterprise and applied against their claims in case of the counterparty’s default.

Pursuant to Dodd-Frank’s clearing mandate, all new clearable swaps since June 10, 2013, are
now cleared through central clearinghouses. As users of cleared OTC derivatives, the
Enterprises are required to post initial and variation margin with central clearinghouses.
Although the posting of this margin exposes the Enterprises to counterparty risk, the
counterparty risk associated with these instruments is mitigated by the substitution of the credit
risk of individual counterparties with the credit risk of the clearinghouse.

Both Enterprises recognize and monitor their derivative counterparties’ credit risk pursuant to
risk management policies and under FHFA guidance and supervision.

For example, the Enterprises have both specific policies and teams of personnel to monitor the
creditworthiness of their derivatives counterparties (e.g., clearinghouses). They draw on a
variety of data for this purpose including published credit ratings, their own financial models and
analyses, and securities pricing (if available). In addition, daily, the Enterprises measure the
value of their derivatives exposures and adjust collateral amounts accordingly. In accordance


reach $250 million). See OIG, Analysis of the 2012 Amendments to the Senior Preferred Stock Purchase
Agreements, WPR-2013-03 (Mar. 20, 2013) (online at: http://www.fhfaoig.gov/Content/Files/WPR-2013-
002_2.pdf). As noted, the Enterprises use derivatives to hedge against risks associated with their mortgage related
assets. In a meeting with OIG, FHFA officials stated that as the size (and complexity) of Enterprises’ retained
portfolios is reduced pursuant to the PSPAs requirement, the derivatives portfolios will similarly shrink.




   Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
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with market-standard practice, specific thresholds for posting collateral are impacted by changes
to the parties’ credit ratings.

Both Enterprises have detailed procedures for addressing an increase in counterparty risk from
individual derivatives counterparties. For example, they may institute increased collateral
requirements or curtail business with them. At both Enterprises, proposed exceptions to
counterparty risk exposure limits or established procedures must be approved by senior
management. In addition, the Enterprises coordinate these existing efforts with FHFA and
share their views about derivative market participants that present particular counterparty risk
concerns.

FHFA’s Oversight of the Enterprises
In its oversight of the Enterprises’ management of derivative counterparty risk, FHFA produces a
weekly report on credit risk associated with the Enterprises’ capital markets counterparties and
holds monthly meetings with senior members of the Enterprises’ derivatives teams. In addition,
FHFA receives daily reports of the Enterprises’ derivative exposures. FHFA reviews these
reports for irregularities. Typically, FHFA does not monitor each of the Enterprises’ individual
derivative transactions. Rather, FHFA oversees the Enterprises’ derivatives generally and delves
into greater detail when circumstances indicate that greater oversight is warranted.

In conjunction with its 2008 examinations of the Enterprises, FHFA directed each Enterprise to
develop a strategy to reduce their derivative counterparty exposure and to explore the use of
exchanges and central clearinghouses for their derivatives. Subsequently, the Enterprises
unwound billions of dollars (notional) of their derivatives and began the process of transitioning
their trades through central clearing entities. Indeed, in its 2009 annual report to Congress,
FHFA noted that each of the Enterprises had “constructively explored potential interest rate swap
clearinghouses” and had “adopted an action plan to centrally clear and settle derivative interest
rate swap contracts.” In its 2010 report, FHFA described the Enterprises’ progress in these
regards as “significant.”

In June 2011 and March 2012 (for Fannie Mae and Freddie Mac respectively), FHFA notified
the Enterprises that, based on the Enterprises’ successful completion of specified milestones, it
had concluded that Fannie Mae and Freddie Mac had adequately addressed the respective
directives. At the same time, FHFA noted that it would continue to monitor each Enterprise’s
efforts to reduce its derivatives exposure and to conform to the central clearing requirements of
Dodd-Frank.

FHFA Advisory Bulletin
FHFA Advisory Bulletins are staff documents through which FHFA provides guidance to the
entities it regulates regarding particular supervisory issues. Although an Advisory Bulletin does
not have the force of a regulation or an order, it does reflect the position of FHFA on the
particular issue and is followed by supervisory staff. In FHFA’s annual report to Congress,
FHFA reports the extent of the regulated entities’ compliance with specific guidance provided in
its Advisory Bulletins. FHFA’s Advisory Bulletins are publicly available on FHFA’s website.



   Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
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As noted, Title VII of Dodd-Frank establishes a statutory framework designed, in part, to reduce
risk and increase transparency in the OTC derivatives markets. On March 4, 2011, FHFA issued
Advisory Bulletin 2011-AB-01 advising the FHLBanks to immediately begin the development of
a comprehensive plan for the implementation of the central clearing requirements as proposed by
the CFTC under Dodd-Frank.11

Advisory Bulletin 2011-AB-01 also provides specific guidance regarding the steps the
FHLBanks are to include in their implementation plans. For example, the plans are to identify
“resources required to comply with CFTC rules, including staff, systems, operating policies and
procedures,” and “sources of liquidity to meet all margin requirements that may be required in
connection with both its cleared and non-cleared swap transactions.”

In addition to specified steps, Advisory Bulletin 2011-AB-01 instructs each FHLBank to
update its policies and procedures in relevant areas and recommends that each FHLBank’s
implementation plan be approved by its board of directors no later than May 31, 2011. FHFA
stated it would review and assess the FHLBanks planning and operational readiness for
complying with Dodd-Frank’s clearing requirement through examinations and other supervisory
reviews.

Findings

     1. The Enterprises’ implementation of Dodd-Frank’s central clearing mandate mitigates, in
        part, their counterparty risk.

To reduce risk and increase transparency in the OTC derivatives marketplace, Dodd-Frank
established structural changes to that market and overhauled the relevant regulatory regime.
OIG concluded that, in light of the mitigation of derivative counterparty risk resulting from the
implementation of Dodd-Frank’s central clearing mandate, FHFA’s oversight of the Enterprises’
management of this risk is such that, although still a concern, no additional study of this topic is
needed for now. However, OIG will continue to monitor the situation and initiate additional
work on this topic if necessary.

     2. OIG found that FHFA’s oversight of its regulated entities’ implementation of Dodd-
        Frank was not uniformly applied.

In particular, in contrast to its oversight of the FHLBanks, FHFA did not issue to the Enterprises
an Advisory Bulletin providing regulatory guidance regarding the implementation of Dodd-
Frank.

Recommendation

11
   On January 20, 2011, OIG commented on FHFA’s Draft Advisory Bulletin 2011-AB-01. Based on OIG’s
comments, FHFA revised the draft bulletin before it was issued to the FHLBanks. See OIG, Inaugural Semiannual
Report to the Congress, at 39 (Mar. 31, 2011) (online at:
http://www.fhfaoig.gov/Content/Files/inaugural%20semiannual%20report.pdf).




     Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
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OIG recommends that FHFA’s Advisory Bulletins that provide guidance regarding
implementation of critical regulatory changes be issued to all the impacted regulated entities.
This recommendation is intended to further regulatory consistency in FHFA’s oversight practices
of its safety and soundness mission.

Scope and Methodology

The purpose of this evaluation was to assess FHFA’s oversight of the Enterprises’ management
of counterparty risk associated with their investments in derivatives and implementation of
Dodd-Frank.

To address these objectives, OIG:

         Reviewed Dodd-Frank, HERA, the Government Performance and Results Modernization
          Act of 2010,12 Federal Reserve Board of Governors regulations, SEC regulations, and
          CFTC regulations;
         Reviewed Enterprises’ financial disclosures;
         Interviewed senior FHFA officials;
         Interviewed senior Enterprise staff in the capital markets businesses;
         Reviewed relevant documents including FHFA directives, examination reports, and the
          Enterprises’ policies and procedures pertaining to counterparty risk management and
          derivative products;
         Conducted due diligence on market practices and methodologies with representatives of
          the clearing agencies, Nationally Recognized Statistical Rating Organizations, and other
          market participants; and
         Reviewed relevant academic literature and industry publications.

The preparation for this evaluation closeout report was conducted under the authority of the
Inspector General Act and is in accordance with the Quality Standards for Inspection and
Evaluation (January 2012), which was promulgated by the Council of the Inspectors General on
Integrity and Efficiency. These standards require OIG to plan and perform an evaluation that
obtains evidence sufficient to provide reasonable basis to support the findings made herein. OIG
believes that the findings discussed in this report meet these standards.

This study was conducted by David P. Bloch, Director, Division of Mortgage, Investments, and
Risk Analysis and Ezra Bronstein, Investigative Counsel. OIG appreciates the cooperation of
FHFA and Enterprise staff, as well as the assistance of all those who contributed to the


12
   Public L. No. 111-352. The Government Performance and Results Modernization Act of 2010 (GPRMA)
establishes federal planning standards. The establishment of timelines and benchmarks is critical to assess progress
in implementing plans and is consistent with GPRMA planning requirements.




     Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
                                                         10
preparation of this report including Jacob Kennedy, Investigative Evaluator and Desiree Yang,
Investigative Analyst.

The performance period for this evaluation closeout report was from October 2012 to May 2013.




  Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
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Appendix: FHFA’s Comments on FHFA-OIG’s Findings and Recommendation




  Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
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Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
                                             13
Additional Information and Copies



For additional copies of this report:

         Call: (202) 730-0880

         Fax: (202) 318-0239

         Visit: www.fhfaoig.gov



To report potential fraud, waste, abuse, mismanagement, or any other kind of criminal or
noncriminal misconduct relative to FHFA’s programs or operations:

         Call: (800) 793-7724

         Fax: (202) 318-0358

         Visit: www.fhfaoig.gov/ReportFraud

         Write:
               FHFA Office of Inspector General
               Attn: Office of Investigation – Hotline
               400 Seventh Street, S.W.
               Washington, DC 20024




   Federal Housing Finance Agency Office of Inspector General • ESR-2014-001 • November 20, 2013
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