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WASHINGTON — U.S. Congressman Jeb Hensarling (TX-05) issued today the following statement after Fannie Mae President and CEO Herbert Allison announced a moratorium on all entertainment spending for customers and employees, including meals, sporting events, and holiday parties. Last month, Congressman Hensarling sent a letter to Financial Services Chairman Barney Frank and demanded an investigation into allegations made by CBS-11 Dallas that Fannie Mae spent over $6,000 on a recreational outing for Fannie Mae executives on September 29, 2008—just 22 days after the American taxpayers took over the mortgage-finance giant and Treasury pledged at least $200 billion to Fannie Mae and Freddie Mac.
Congressman Hensarling said, “Since the American people have put their tax dollars at risk to bail out the financial decisions of Fannie Mae, I want to ensure that their dollars were not being used to subsidize golf, booze, and mango towel service—whatever that is.
“Mr. Allison expressed regret about the September golf outing and promised financial accountability within his organization. I appreciate Mr. Allison taking responsibility for the mistake and am satisfied with the decision to cease all recreational spending.
“I also want to thank Chairman Frank for his immediate attention to the matter. Congress will continue to monitor the situation to ensure that no more taxpayer money is wasted by the mortgage giant.”
Text of the letter is provided below.
Dear Congressman Hensarling:
Chairman Frank forwarded to me your letter to him of November 4, 2008, regarding travel and entertainment expenses for a Fannie Mae customer event in Grapevine, Texas, in late September. I feel that I should respond to you personally.
In the first weeks of our conservatorship, we began a sweeping transformation of the way Fannie Mae does business in order to align our practices with the interests of taxpayers and homeowners. One element of this change was dramatically reducing or eliminating, as appropriate, expenditures in the areas of lobbying, entertainment, sponsorships, meetings and events, and certain charitable activities. While we were making these cutbacks, our firm wide review did not identify the event in Dallas. We regret that oversight, we were highly embarrassed by it, and we took immediate action to prevent a recurrence.
We imposed a moratorium on all entertainment expenses for customers or employees including meals, sporting events, and holiday parties as Fannie Mae completed a comprehensive assessment of all such expenditures and activities. The freeze was strictly enforced and continually communicated to all managers at the company.
On November 26th, we replaced the moratorium with a new policy that is appropriate to Fannie Mae’s current circumstances. It includes new restrictions and supervisory controls on gifts and entertainment whether provided by or offered to any company employee.
The new policy was reviewed and approved by our federal regulator and Conservator, the Federal Housing Finance Agency. The policy will be strictly enforced.
Let me assure you that our management team is constantly striving to serve the public interest more efficiently and effectively and gratefully welcomes ideas on how we can perform better.
Please contact me if you have questions.
Sincerely,
Herbert M. Allison, Jr.
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