I 

111TH CONGRESS 

1ST SESSION H. R. 1929 

To establish the Fannie Mae and Freddie Mac Investigative Commission 

to investigate the policies and practices engaged in by officers and directors at Fannie Mae and Freddie Mac responsible for making the decisions 

that led to the enterprises’ financial instability and the subsequent Federal conservatorship of such enterprises. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 2, 2009 

Ms. KAPTUR introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To establish the Fannie Mae and Freddie Mac Investigative 

Commission to investigate the policies and practices engaged in by officers and directors at Fannie Mae and 

Freddie Mac responsible for making the decisions that 

led to the enterprises’ financial instability and the subsequent Federal conservatorship of such enterprises. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Fannie Mae and 

5 Freddie Mac Investigative Commission Act’’. 


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1 SEC. 2. DEFINITIONS AND FINDINGS. 

2 (a) DEFINITIONS.—In this Act: 

3 (1) The term ‘‘Commission’’ means the Fannie 

4 Mae and Freddie Mac Investigative Commission es5 tablished under section 3. 

6 (2) The term ‘‘Fannie Mae’’ means the Federal 

7 National Mortgage Corporation. 

8 (3) The term ‘‘Freddie Mac’’ means the Fed9 eral Home Loan Mortgage Corporation. 

10 (b) FINDINGS.—Congress finds the following: 

11 (1) With foreclosure activity increasing 81 per12 cent in 2008, the mortgage foreclosure crisis has 

13 triggered the Nation’s most significant economic 

14 downturn in recent history during which the stock 

15 market has dipped to record lows. While neighbor16 hoods continue to deteriorate due to a loss of value, 

17 an estimated 8,000,000 homes are projected to enter 

18 foreclosure in the next 4 years. 

19 (2) There is a need to fully document what 

20 went wrong in the management of secondary market 

21 activities at Fannie Mae and Freddie Mac that con22 tributed to the misguided, potentially fraudulent 

23 policies and practices that ultimately led to the Fed24 eral conservatorship of such enterprises so that simi25 lar mismanagement and risky behavior will not be 

26 repeated in the future. 


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1 (3) The people of the United States have suf2 fered tremendous harm from the irresponsible, high 

3 risk, and unregulated practices of the mortgage in4 dustry under the policies of Fannie Mae and Freddie 

5 Mac. 

6 (4) The Federal conservatorship of Fannie Mae 

7 and Freddie Mac may cost the American people hun8 dreds of billions of dollars, likely exceeding 

9 $200,000,000,000, making it potentially the largest 

10 debt unjustly imposed on the taxpayers of the 

11 United States in our Nation’s history. 

12 (5) The American people, forced to shoulder the 

13 financial burden of the damage done to the economy 

14 of the United States, deserve to know who made the 

15 decisions that contributed to the crisis, what went 

16 wrong, and why. 

17 (6) Any executive officers and members of the 

18 boards of directors at Fannie Mae and Freddie Mac 

19 who may have exercised poor judgment, or com20 mitted wrongdoing, should be held accountable for 

21 such judgments and actions. 

22 (7) In June 2003, Freddie Mac disclosed that 

23 it had misstated its earnings by roughly 

24 $5,000,000,000 between the years 2000 and 2002 to 


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1 smooth the appearance of quarterly volatility in 

2 earnings and to meet Wall Street expectations. 

3 (8) In December 2004, the Securities and Ex4 change Commission found that Fannie Mae had vio5 lated accounting rules and needed to restate its 

6 earnings by recording a loss of up to 

7 $9,000,000,000 from 2001 to 2004. 

8 (9) For nearly two decades the shareholders of 

9 Fannie Mae and Freddie Mac and the employees 

10 and directors of the boards of these enterprises have 

11 enjoyed large dividends, bonuses, salaries, and other 

12 compensation based on policies and practices that 

13 may have been misguided or fraudulent. 

14 (10) In 2007, former Freddie Mac Chairman 

15 and Chief Executive Richard Syron received millions 

16 of dollars in compensation, despite the fact that the 

17 enterprise’s stock lost half its value. 

18 (11) In 2007, former Fannie Mae President 

19 and Chief Executive Daniel Mudd received millions 

20 of dollars in compensation. 

21 (12) Previous investigations of Fannie Mae and 

22 Freddie Mac have focused on accounting fraud, but 

23 there have not been any investigations on the full 

24 range of policies, practices, and high risk board deciVerDate Nov 24 2008 22:21 Apr 06, 2009 Jkt 079200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1929.IH H1929

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1 sions that contributed to and exacerbated our Na2 tion’s housing crisis. 

3 (13) According to the Office of Federal Hous4 ing Enterprise Oversight, regulation allowed Freddie 

5 Mac and Fannie Mae to operate with just $83.2 bil6 lion of capital at the end of 2007, even though it 

7 supported $5.2 trillion of debt and guarantees. 

8 (14) The boards of directors of Fannie Mae and 

9 Freddie Mac have been held harmless throughout 

10 the Nation’s housing crisis, despite having the au11 thority to create and influence many of the policies 

12 of such enterprises. 

13 (15) The involvement of the boards of directors 

14 in the policies of Fannie Mae and Freddie Mac has 

15 been shrouded in secrecy, as their policymaking deci16 sions have not been publicly disclosed, despite the 

17 public protections and public benefits their enter18 prises receive. 

19 SEC. 3. ESTABLISHMENT. 

20 There is established a commission to be known as the 

21 ‘‘Fannie Mae and Freddie Mac Investigative Commis22 sion’’. 

23 SEC. 4. DUTY OF THE COMMISSION. 

24 (a) IN GENERAL.—The Commission shall investigate, 

25 determine, and make recommendations to Congress with 


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1 respect to the policies, practices, and board decisions of 

2 Fannie Mae and Freddie Mac subsequent to the actions 

3 of the Resolution Trust Corporation during the late 1980s 

4 and from the 1990s through the present that led to the 

5 enterprises’ financial instability and the subsequent Fed6 eral conservatorship of such enterprises. 

7 (b) SPECIFIC TOPICS.—In carrying out its duty 

8 under subsection (a), the Commission shall address and 

9 analyze, by year, beginning in 1990 and through the 

10 present, the following: 

11 (1) The appropriate role of Fannie Mae and 

12 Freddie Mac in expanding homeownership and the 

13 appropriate role in helping the housing market re14 cover nationwide. 

15 (2) Fannie Mae and Freddie Mac’s involve16 ment, if any, in the development of faulty risk 

17 standards and accounting practices and the creation 

18 and proliferation of the securitized mortgage instru19 ment, and how such instrument affected the solvency 

20 of such enterprises. 

21 (3) The role of the boards of directors of 

22 Fannie Mae and Freddie Mac in developing and vot23 ing for the investment, accounting, and contracting 

24 policies of such enterprises, particularly as they reVerDate Nov 24 2008 22:21 Apr 06, 2009 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1929.IH H1929

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1 late to risk assessments, subprime mortgages, and 

2 the international securitization of mortgages. 

3 (4) Any board members, working committees, 

4 or executive officers responsible for making the deci5 sions to adapt or change risk assessments or grow 

6 Fannie Mae and Freddie Mac’s portfolios of 

7 subprime mortgage loans, a summary of actual 

8 board votes on the same, and the process that led 

9 to such decisions. 

10 (5) The decisions of the boards or executive of11 ficers of Fannie Mae and Freddie Mac that contrib12 uted or may have contributed to the overvaluation of 

13 risky mortgage investments in the stock market and, 

14 later, to the growth of the subprime mortgage indus15 try. 

16 (6) The annual compensation, including all 

17 forms of compensation, stock options, and other fi18 nancial benefits accrued to each of Fannie Mae and 

19 Freddie Mac’s executive officers and members of the 

20 boards of directors. 

21 (7) Such other matters that the Congress may 

22 place before the Commission. 

23 SEC. 5. MEMBERSHIP. 

24 (a) NUMBER AND APPOINTMENT.— 


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1 (1) IN GENERAL.—The Commission shall be 

2 composed of 8 members, appointed as follows: 

3 (A) Two members appointed by the Speak4 er of the House of Representatives. 

5 (B) Two members appointed by the minor6 ity leader of the House of Representatives. 

7 (C) Two members appointed by the major8 ity leader of the Senate. 

9 (D) Two members appointed by the minor10 ity leader of the Senate. 

11 (2) QUALIFICATIONS.—Members of the Com12 mission shall be individuals who are of recognized 

13 standing and distinction in the areas of banking, se14 curities, and finance regulation, consumer advocacy 

15 and fair housing programs, and in the mortgage in16 dustry. 

17 (3) CONFLICT OF INTEREST.—Members of the 

18 Commission shall not have a conflict of interest that 

19 is relevant to any matter the Commission is required 

20 to investigate under section 4. 

21 (4) DEADLINE FOR APPOINTMENT.—Members 

22 of the Commission shall be appointed not later than 

23 90 days after the date of enactment of this Act. 

24 (5) CHAIRPERSON.—The Chairperson of the 

25 Commission shall be designated by the Speaker of 


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1 the House of Representatives at the time of appoint2 ment. 

3 (b) TERMS.— 

4 (1) IN GENERAL.—Each member shall be ap5 pointed for the life of the Commission. 

6 (2) VACANCIES.—A vacancy on the Commission 

7 shall— 

8 (A) not affect the power of the remaining 

9 members to execute the duty of the Commis10 sion; and 

11 (B) be filled in the manner in which the 

12 original appointment was made. 

13 (c) COMPENSATION.— 

14 (1) RATES OF PAY; TRAVEL EXPENSES.—Each 

15 member shall serve without pay, except that each 

16 member shall receive travel expenses, including per 

17 diem in lieu of subsistence, in accordance with appli18 cable provisions under subchapter I of chapter 57 of 

19 title 5, United States Code. 

20 (2) PROHIBITION OF COMPENSATION OF FED21 ERAL EMPLOYEES.—Notwithstanding paragraph (1), 

22 any member of the Commission who is a full-time of23 ficer or employee of the United States may not re24 ceive additional pay, allowances, or benefits because 

25 of service on the Commission. 


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1 (d) MEETING REQUIREMENTS.— 

2 (1) FREQUENCY.— 

3 (A) QUARTERLY MEETINGS.—The Com4 mission shall meet at least quarterly. 

5 (B) ADDITIONAL MEETINGS.—In addition 

6 to quarterly meetings, the Commission shall 

7 meet at the call of the Chairperson or a major8 ity of its members. 

9 (2) QUORUM.—Five members of the Commis10 sion shall constitute a quorum, but a lesser number 

11 may hold hearings. 

12 (3) MEETING BY TELEPHONE OR OTHER AP13 PROPRIATE TECHNOLOGY.—Members of the Com14 mission are permitted to meet using telephones or 

15 other suitable telecommunications technologies pro16 vided that all members of the Commission can fully 

17 communicate with all other members simultaneously. 

18 SEC. 6. DIRECTOR AND STAFF OF COMMISSION; EXPERTS 

19 AND CONSULTANTS. 

20 (a) DIRECTOR.— 

21 (1) APPOINTMENT.—The Commission shall 

22 have a Director who shall be appointed by the Chair23 person with the approval of the Commission. 

24 (2) CREDENTIALS.—The Director shall have ex25 perience in the areas of banking, securities, and fiVerDate Nov 24 2008 22:21 Apr 06, 2009 Jkt 079200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1929.IH H1929

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1 nance regulation, specifically in the mortgage indus2 try, consumer advocacy, and fair housing programs. 

3 (3) SALARY.—The Director shall be paid at a 

4 rate determined by the Chairperson with the ap5 proval of the Commission, except that such rate may 

6 not exceed the rate of basic pay for GS–15 of the 

7 General Schedule. 

8 (b) STAFF.—With the approval of the Chairperson, 

9 the Director may appoint and fix the pay of additional 

10 qualified personnel as the Director considers appropriate. 

11 (c) EXPERTS AND CONSULTANTS.—With the ap12 proval of the Commission, the Director may procure tem13 porary and intermittent services under section 3109(b) of 

14 title 5, United States Code, but at rates for individuals 

15 not to exceed the daily equivalent of the maximum annual 

16 rate of basic pay for GS–15 of the General Schedule. 

17 (d) STAFF OF FEDERAL AGENCIES.—Upon request 

18 of the Commission, Chairperson, or Director, the head of 

19 any Federal department or agency may detail, on a nonre20 imbursable basis, any of the personnel of that department 

21 or agency to the Commission to assist the Commission in 

22 carrying out its duty under this Act. 

23 SEC. 7. POWERS OF COMMISSION. 

24 (a) HEARINGS AND SESSIONS.—The Commission 

25 may, for the purposes of carrying out this Act, hold hearVerDate Nov 24 2008 22:21 Apr 06, 2009 Jkt 079200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1929.IH H1929

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1 ings, sit and act at such times and such places, take testi2 mony, and receive evidence as the Commission considers 

3 appropriate. 

4 (b) SUBPOENA POWER.— 

5 (1) IN GENERAL.—The Commission may issue 

6 a subpoena to require the attendance and testimony 

7 of witnesses and the production of evidence relating 

8 to any matter under investigation by the Commis9 sion. 

10 (2) ISSUANCE AND SIGNATURE.—Subpoenas 

11 issued under paragraph (1) shall bear the signature 

12 of the Chairperson of the Commission and shall be 

13 served by any person or class of persons designated 

14 by the Chairperson for that purpose. 

15 (3) ENFORCEMENT.—If a person refuses to 

16 obey a subpoena issued under paragraph (1), the 

17 Commission may apply to a United States district 

18 court for an order requiring that person to appear 

19 before the Commission to give testimony, produce 

20 evidence, or both, relating to the matter under inves21 tigation. The application may be made within the ju22 dicial district where the hearing is conducted or 

23 where that person is found, resides, or transacts 

24 business. Any failure to obey the order of the court 

25 may be punished by the court as civil contempt. 


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1 (c) POWERS OF MEMBERS AND AGENTS.—Any mem2 ber or agent of the Commission may, if authorized by the 

3 Commission, take any action which the Commission is au4 thorized to take under this Act. 

5 (d) OBTAINING OFFICIAL DATA.—The Commission 

6 may secure directly from any department or agency of the 

7 United States information necessary to enable it to carry 

8 out its duty under this Act. Upon request of the Chair9 person, the head of that department or agency shall fur10 nish that information to the Commission. 

11 (e) PHYSICAL FACILITIES AND EQUIPMENT.—The 

12 Architect of the Capitol, in consultation with the appro13 priate entities in the legislative branch, shall locate and 

14 provide suitable facilities and equipment for the operation 

15 of the Commission on a nonreimbursable basis. 

16 (f) ADMINISTRATIVE SUPPORT SERVICES.—Upon re17 quest of the Commission, the Architect of the Capitol and 

18 the Administrator of the General Services shall provide to 

19 the Commission on a nonreimbursable basis such adminis20 trative support services as the Commission may request 

21 in order for the Commission to carry out its duty under 

22 this Act. 

23 (g) BYLAWS, RULES, AND REGULATIONS.—The 

24 Commission may adopt, amend, and repeal bylaws, rules, 


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1 and regulations governing the conduct of its business and 

2 the performance of its duties. 

3 (h) COMMISSION RECORDS.—The Commission shall 

4 keep accurate and complete records of its doings and 

5 transactions which shall be made available for public in6 spection, and for the purpose of audit and examination 

7 by the Comptroller General or his designee. 

8 SEC. 8. INFORMATION FROM FREDDIE MAC, FANNIE MAE, 

9 AND THE FHFA. 

10 (a) ENTERPRISES.—Fannie Mae and Freddie Mac 

11 shall provide full and prompt access to the Commission 

12 to any books, records, and other information requested for 

13 the purposes of carrying out its duty under this Act. 

14 (b) FHFA.—Upon request of the Commission, the 

15 Director of the Federal Housing Finance Agency shall 

16 provide access to any information necessary to assist the 

17 Commission in carrying out its duty under this Act. 

18 SEC. 9. REPORT. 

19 Not later than 12 months after the date on which 

20 all initial members are appointed, the Commission shall 

21 submit to Congress a final report containing a detailed 

22 statement of the findings, conclusions, and recommenda23 tions of the Commission. 


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1 SEC. 10. AUTHORIZATION OF APPROPRIATIONS. 

2 There are authorized to be appropriated to the Com3 mission such sums as may be necessary for fiscal year 

4 2010 to carry out this Act. 

5 SEC. 11. TERMINATION. 

6 The Commission shall terminate following the sub7 mission and presentation of its final report and rec8 ommendations under section 9, but not later than 30 days 

9 after such submission and presentation. 

Æ 


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