article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Independent Fannie Mae and Freddie Mac Investigative Commission Act''. SEC. 2. FINDINGS. Congress finds the following: (1) The United States has suffered tremendously from the irresponsible and unchecked growth of the mortgage industry which proliferated under the policies of Fannie Mae and Freddie Mac. (2) The Federal conservatorship of Fannie Mae and Freddie Mac may cost the American people a minimum of $200,000,000,000, and potentially $2.4 trillion, making it potentially the largest financial bailout in our Nation's history. (3) The American people, forced to shoulder the financial burden of the bailout, deserve to know what went wrong and why. (4) Any executive officers and members of the boards of directors at Fannie Mae and Freddie Mac who may have exercised poor judgment or committed wrongdoing should be held accountable for such judgments and actions. (5) In June 2003, Freddie Mac disclosed that it had misstated its earnings by roughly $5 billion between the years 2000 and 2002 to smooth the appearance of quarterly volatility in earnings and to meet Wall Street expectations. (6) In December 2004, the Securities and Exchange Commission found that Fannie Mae had violated accounting rules and needed to restate its earnings by recording a loss of up to $9 billion from 2001 to 2004 based on board policies established prior to that period. (7) The shareholders of Fannie Mae and Freddie Mac and the employees and directors of the boards of these enterprises have enjoyed large dividends, bonuses, salaries, and other compensation based on policies and practices that may have been misguided or fraudulent. (8) In 2007, former Freddie Mac Chairman and Chief Executive Richard Syron alone received nearly $18,300,000 in compensation, despite the fact that the enterprise's stock lost half its value. (9) Last year, former Fannie Mae President and Chief Executive Daniel Mudd received compensation valued at $11,600,000. (10) Previous investigations of Fannie Mae and Freddie Mac have focused on accounting fraud, but there have not been any investigations on the policies and decisions that contributed to and exacerbated our Nation's housing crisis and financial collapse of these corporations. (11) According to the Office of Federal Housing Enterprise Oversight, regulation allowed Freddie Mac and Fannie Mae to overleverage and operate with just $83.2 billion of capital at the end of 2007, even though it supported $5.2 trillion of debt and guarantees. (12) Although the executive officers of Fannie Mae and Freddie Mac have come under scrutiny, their boards of directors have been held harmless throughout the Nation's housing crisis, despite having the authority to create, influence, and vote for the policies of such enterprises. (13) The involvement of the boards of directors in the policies of Fannie Mae and Freddie Mac has been shrouded in secrecy, as their policymaking decisions have not been publicly disclosed, despite the public protections and benefits their enterprises receive. (14) There is a need to fully understand what went wrong in the management of Fannie Mae and Freddie Mac and the misguided, potentially fraudulent board policies and practices that ultimately led to the Federal conservatorship of such enterprises so that similar mistakes will not be repeated in the future. SEC. 3. ESTABLISHMENT. There is established a commission to be known as the ``Independent Fannie Mae and Freddie Mac Investigative Commission'' (in this Act referred to as the ``Commission''). The Commission shall function upon the legislation being signed by the President of the United States and will conduct its investigations for a period of two years, issuing a final report upon completion with necessary hearings and assembly of related records for the period following the savings and loan crisis of the 1980s to the present. SEC. 4. DUTIES OF THE COMMISSION. The Commission shall investigate, determine, and make recommendations with respect to the following: (1) The policies, practices, and board decisions of Fannie Mae and Freddie Mac from the 1990s through the present that led to the enterprises' financial instability and the subsequent Federal conservatorship of such enterprises. (2) Fannie Mae and Freddie Mac's involvement, if any, in the creation and proliferation of the securitized mortgage instrument, and how such instrument affected the solvency of such enterprises. (3) The role of the boards of directors of Fannie Mae and Freddie Mac in developing the accounting and financial risk policies of such enterprises, particularly as they relate to subprime mortgages and the international securitization of mortgages. (4) The actions of each board member or members, executive officer or officers, or the board member or members and executive officer or officers responsible for making the financial decisions to grow such enterprises' portfolios of subprime mortgage loans. (5) The board member or members, executive officer or officers, or the board member or members and executive officer or officers responsible for making the decisions that may have encouraged the proliferation of the subprime mortgage industry. (6) The decisions that contributed to the overvaluation of risky mortgage investments in the stock market and to the growth of the subprime mortgage industry. (7) The annual compensation, stock options, and other financial benefits that accrued to each of Fannie Mae and Freddie Mac's executive officers and members of their boards of directors from 1990 to 2008. (8) The board members, if any, who financially benefitted from their appointment to either board of directors and/or through the decisions of such board. (9) The tracking of political contributions to Presidential and congressional elections and campaign funds that served to influence U.S. housing policy by board members, officers, and employees. (10) The appropriate role of Fannie Mae and Freddie Mac in the U.S. housing market nationwide and regionally. (11) Such other matters that the President or the Congress may place before the Commission. (12) The Commission shall possess full subpoena power and authority to hire necessary staff to conduct its affairs. SEC. 5. MEMBERSHIP. (a) Number and Appointment.--The Commission shall be composed of 9 members appointed by the President as follows: (1) One member who shall serve as the Chairperson, shall be appointed with the advice of the Senate. (2) Eight members, not more than four of whom shall be members of the same political party, to be appointed based on recommendations from the Speaker and the minority leader of the House of Representatives, and the majority leader and minority leader of the Senate, who shall each submit the names of two recommended candidates to the President. (b) Terms.--Each member shall be appointed for the life of the Commission. (c) Vacancies.--A vacancy on the Commission shall be filled in the manner in which the original appointment was made for the remainder of that term. If there is a vacancy in the Chair of the Commission, the remaining members of the Commission may choose from among the members an interim Chairperson to serve until a new Chairperson is appointed. SEC. 6. COMPENSATION. Members of Congress.--Members of the Commission who are Members of Congress shall not receive additional pay, allowances, or benefits by reason of their service on the Commission, but, as permitted by law, may be reimbursed for travel, subsistence, and other necessary expenses incurred when performing duties of the Commission. SEC. 7. COMMISSION HIRING ALLOWANCE. Such sums as are necessary shall be appropriated to conduct the activities of the Commission but shall be no less than $5 million annually. Recovery of any assets fraudulently accruing to members of the boards of directors shall be returned to the general Treasury to offset such expenditures.
summary: Independent Fannie Mae and Freddie Mac Investigative Commission Act - Establishes the Independent Fannie Mae and Freddie Mac Investigative Commission to investigate and issue a final report on the period following the savings and loan crisis of the 1980s to the present. Requires the Commission to investigate: (1) the policies, practices, and board decisions of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) from the 1990s through the present that led to their financial instability and subsequent federal conservatorship; (2) Fannie Mae and Freddie Mac's involvement, if any, in the creation and proliferation of the securitized mortgage instrument, and how such instrument affected their solvency; (3) the role of their boards of directors in developing their accounting and financial risk policies; (4) the actions of each board member or members, executive officer or officers, or the board member or members and executive officer or officers responsible for making the financial decisions to grow the enterprises' portfolios of subprime mortgage loans; and (5) the board member or members, executive officer or officers, or the board member or members and executive officer or officers responsible for making the decisions that may have encouraged the proliferation of the subprime mortgage industry.