Issa Threatens To Strip Federal Money From Fannie And Freddie

Taxpayer money shouldn't be used to back some $6 trillion in home mortgages if there is no inspector general keeping watch over those funds, the ranking Republican on the House Oversight and Government Reform Committee said Wednesday in response to a story first reported by Huffington Post.

Thanks to complex maneuvering, the Federal Housing Finance Agency -- which includes Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, comprising more than 80 percent of mortgage purchases and guarantees issued since mid-2008 -- convinced the Department of Justice's Office of Legal Counsel back in September that their inspector general did not have the authority to investigate agency wrongdoing, according to documents obtained by HuffPost.

But if regulators aren't authorized to monitor Fannie and Freddie's use of federal funds, Issa said Wednesday, maybe the government should not be responsible for their loans.

"Until this issue is resolved, Congress should question the wisdom of continuing to provide taxpayer support to Fannie and Freddie until proper oversight is in place," Issa said in a statement. "It is absolutely unconscionable that Fannie Mae and Freddie Mac, which were at the heart of the subprime housing collapse last fall that sent our economy into a tailspin, should be without independent oversight at a time when the federal government now owns over half of all the mortgages in the United States."

Issa's temporary solution would be to reinstate Ed Kelley, who served as the agency's inspector general prior to the OLC ruling, as the acting IG pending a Congressional investigation.

"There is no way that Congress intended for there to be no IG for the FHFA and if we need to go back and fix this legislatively, we should do so immediately," he said.