The Federal Housing Finance Agency (FHFA) now has a Senate-confirmed inspector general, a corporate compliance expert who hails from the private sector.
Brian Tomney, who the Senate confirmed by voice vote Thursday evening, most recently led the office of corporate investigations at Capital One. In that role he oversaw a team of researchers to investigate allegations of internal fraud and unethical business practices. Now, he will lead an office that does the same for the regulator and conservator of Fannie Mae and Freddie Mac.
Tomney will likely take a pay cut to lead the watchdog agency. At Capital One, per his public financial disclosures, he made $516,000 in 2021. The previous Senate-confirmed FHFA inspector general, Laura Wertheimer, who resigned after she was investigated for abusing her authority, earned $173,000 in 2020, according to salary information from the Office of Personnel Management.
According to Tomney’s ethics filing last October, he would step down from his position at Capital One as soon as he was confirmed, but he may still be up for a bonus from the company, according to his filing. Capital One exited the mortgage lending space in 2017.
Capital One did not return a request for comment.
In a statement, FHFA Acting Director Sandra Thompson said that inspectors general promote accountability through their audits, reviews, evaluations and investigations.
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“Inspector Tomney’s independent oversight will give the American people, whom we all serve, confidence that FHFA is an excellent steward of resources and public trust,” said Thompson.
Tomney will replace Phyllis Wong, who has been acting FHFA inspector general since July 2021.
At his confirmation hearing in December, Tomney explained to lawmakers how he viewed the importance of independence — and how he would fend off any interference.
“Independence is the heart of the role of the inspector general,” Tomney said. “But for that independence, the [office of the inspector general] is nothing but a paper tiger.”
In response to a question posed by Democratic Sen. Jon Tester of Montana, Tomney said that while it was important to have a productive relationship with the agency head, he would not shy away from obtaining information needed to conduct investigations.
Inspectors general are “not necessarily the life of the party when they come walking in,” Tomney said. “If I am unable to get access to information which is fundamental to the work, there are alternatives, such as speaking with folks in Congress.”
During the hearing, lawmakers also sought to determine what Tomney might or might not prioritize as the top watchdog for the FHFA.
Republican Sen. Patrick Toomey from Pennsylvania asked whether Tomney would pursue investigations of borrowers that misrepresent their eligibility to get down payment assistance on agency-backed loans.
Borrower fraud in down payment assistance is rare. But Tomney said that, as FHFA inspector general, he would “engage in robust enforcement efforts” to identify down payment assistance fraud for agency-backed loans.
Tomney said he would continue ongoing efforts at the office of the inspector general, including audits regarding appraisal bias, and diversity.
In November, in its annual plan for 2022, the FHFA office of the inspector general said it would conduct an audit of FHFA’s initiatives in response to Biden’s January 2021 executive order on racial equity, and whether those initiatives were achieving their purpose.
The FHFA inspector general released a report on Thursday that found that the FHFA implemented equal employment opportunity standards, but it did not always fully adhere to them. Some parts of the agency were not fully versed in the standards, and the agency’s use of diversity data in its hiring and retention practices was inconsistent across its various divisions.
In its annual plan, the office of the inspector general also said it planned to assess any revisions FHFA made to Fannie Mae and Freddie Mac’s underwriting requirements for appraisals to “address any such bias or disparities.”
During his December hearing, Tomney said that assessing FHFA’s steps to address appraisal bias would be a top priority and he would “roll up his sleeves” to address the matter quickly.
