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Watchdog urges DOJ probe of former housing officials

A watchdog group is calling on the Justice Department to investigate three former Obama Administration officials for “revolving door” violations and attempting to influence policies they once helped guide from the private sector.

Campaign for Accountability, led by former Citizens for Responsibility and Ethics (CREW) chief counsel Anne Weismann, submitted the complaint on Tuesday. 

 It comes roughly a week after a New York Times report detailing the roles that David Stevens, Michael Berman and Jim Parrott played in shaping housing finance and the future of Fannie Mae and Freddie Mac during the Obama Administration, and their work in the private sector.

“The nation’s biggest banks desperately want to control the country’s home mortgage system. With trillions of dollars at stake, they have pushed the administration and Congress to put Fannie and Freddie out of business,” Weismann said in a statement. “It is no surprise that they would turn to those who worked on this issue in the administration to help them make their case.

“It is imperative that the Justice Department investigate whether these former officials crossed the ethical line after they walked through the revolving door,” she continued.

Berman, who formerly worked as the chairman of the Mortgage Bankers Association (MBA) and then as a senior adviser for housing finance at the Department of Housing and Urban Development (HUD), worked in part to shape the Obama Administration's position to wind down Fannie and Freddie.

He recruited Stevens, another key player in the Obama Administration proposal, to head the mortgage bankers industry group. Stevens formerly worked as the assistant secretary of housing and the federal housing commissioner at HUD.

Berman, Stevens and Parrott have all met with housing policy officials at the White House since their return to the private sector, according to a Times review of visitor logs and calendars received through an open-records request.

Stevens also had meetings with Edward J. DeMarco, acting director of the Federal Housing Finance Agency, the conservator of Fannie and Freddie.

Federal law prohibits former Executive Branch officials from directly advocating on policies with which they were intimately involved during public service. More specifically, the conflict of interest statute prohibits former officials who worked directly on a “particular matter” from trying to influence it from the outside.

A spokesman for the Morgage Bankers Assocation said in an email that Stevens worked with the general counsel and the "designated ethics official" at HUD "from the moment [he] was first contacted by MBA regarding potential employment."

Stevens did so "to ensure he completely complied with federal law and Obama Administration voluntary policies related to post-employment activities," the spokesman, John Mechem, wrote. "After leaving government, he continued to consult with counsel to make sure he did not even approach the ethical or legal line. At every turn, he erred on the side of caution."

"Outside counsel has reviewed Dave's activities with and on behalf of MBA and its members and has confirmed there is no violation of either the letter or the spirit of the law," Mechem continued.

Further, in the New York Times piece, Stevens’ lawyer fought back against the allegations that he has done anything improper.

“The law is clear that Mr. Stevens’s activities involving development of public policy and even proposed legislation are not encompassed within the prohibited activities outlined” by law, his lawyer, Scott Fredericksen of Foley & Lardner, told the Times.

Parrott, a former HUD official and senior advisor at the White House's National Economic Council who launched a consulting firm with financial clients, told the Times that he does not advocate on behalf of anyone during the meetings, so he has not violated the law. He also holds a post as a senior fellow at the Urban Institute.

“I give them a sense of how people are thinking and how things are likely going to develop in their world,” he said.

Before leaving the White House, he says, he had “careful” discussions regarding what he could and could not do. Talking to government officials about “general policy issues like housing finance reform,” Parrott added, does not violate the statute.

Likewise, Berman — who also has a consulting firm of his own — said that housing finance reform is a general public policy topic, and does not fit the law’s definition of a “particular matter.”

This story was updated at 9:30 p.m.