Federal housing inspector general beginning from the ground up

When Steve Linick arrived for his first day on the job, he was alone.

Linick, the inspector general for the Federal Housing Finance Agency (FHFA), is basically running a startup company, albeit one financed by taxpayers.

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Congress created the office of inspector general amid the nation’s economic implosion in 2008. After some stops and starts, the Senate confirmed him last year.

Before he could play a role in trying to manage and account for $8 trillion in assets, Linick had to buy some office supplies.

“I was basically in an empty room,” he said last month from his new office, which now appears to be adequately equipped. The office was so bare last fall he was initially making calls from his cell phone, waiting for an office phone to arrive.

The 47-year-old has a large portfolio, playing a leading role watching over a federal housing system racked by turmoil.

“Building your own organization is really exciting … but it is challenging,” he said. “When you start with nothing, you’ve got to figure out some basic things.”

For Linick, a career public servant and former prosecutor with the Department of Justice, such meager beginnings are invigorating.

“I love the challenge, and I like building something from scratch,” he said. “This is an opportunity to write our own script.”

It is a script with a lot of twists and turns and some big roles to play. Linick’s position was created alongside the FHFA as part of the 2008 Housing and Economic Recovery Act, in the midst of the sub-prime mortgage meltdown that ultimately dragged down the entire economy.

With Fannie Mae and Freddie Mac currently under federal conservatorship, the FHFA is simultaneously regulating and running the government-sponsored enterprises (GSEs) — and Linick is responsible for keeping an eye on the FHFA.

“I think the mission is incredibly important,” he said. “Taxpayers deserve to know what’s going on.”

The IG’s office has hired 30 people, including a number of former federal prosecutors, with the ultimate goal of having 75 people on board in fiscal 2011.

The creation of a new permanent IG allows for a much more direct watchdog for the federal housing system.

Previously, Fannie and Freddie fell under the purview of the Office of Federal Housing Enterprise Oversight, which was part of the Department of Housing and Urban Development (HUD). That department had its own IG, but that office was responsible for all HUD operations, not just keeping an eye on the GSEs.

In his new office, Linick will keep a close eye on FHFA’s operations. He also will make frequent trips to Capitol Hill to report on what he finds.

As the economic losses of Fannie and Freddie have climbed over $100 billion, their political difficulties have also become well-known. Republicans point the finger at the GSEs for playing a major role in the housing crisis that dragged down the economy.

Now that the GOP has retaken control of the House, conservatives are promising to take action, pushing to privatize the entities within a matter of years.

Enter Linick, who will report to Congress on the successes and failings of the FHFA, which is caught in the middle of the heated debate.

He said he is in “constant communication” with staffers on Capitol Hill.

“It’s critical in my job to have a working relationship” with the legislative branch, he said.

Thus far, he has fielded questions from congressional staff on documentation problems emerging during foreclosure proceedings, and what sort of exit strategy might be in place for removing Fannie and Freddie from conservatorship.

And as lawmakers on both sides of the aisle will be pushing for their favored approach to governmental housing policies, Linick aims to stay above the fray.

Linick wants to stay true to the IG mission and the independence that comes with it. He describes himself primarily as a “fact finder,” and offers this mantra for his work at IG: “insight, transparency, accountability.”

At the Justice Department, Linick served both as executive director of the department’s National Procurement Fraud Task Force and as deputy chief of the fraud section of the criminal division, where he oversaw the handling of white-collar criminal cases involving procurement fraud and public corruption, among others.

Linick has enjoyed bipartisan support. He was originally nominated for the post by President George W. Bush in 2008. He was then re-nominated for the spot by Obama in April 2010 after the Senate failed to act on the original nomination. The upper chamber confirmed him in September.

“Steve is a career prosecutor; he’s had experience dealing with people at high levels of government,” said Steven Tyrrell, who was chief of the fraud section at the Department of Justice, where Linick served as one of his deputies for three and a half years.

He added, “His judgment is always driven by what’s right and what’s important.” Tyrrell now co-chairs the white-collar defense and investigations group at Weil, Gotshal & Manges. 

As with previous administrations, there have been controversies surrounding the independence of IGs in the Obama administration.

Linick serves at the pleasure of the president, but stresses that politics will not interfere in his work.

“Wherever the facts take me, I’ll go,” he said.