Authority of the Former Inspector General for the Federal Housing Finance Board to Act as Inspector General for the Federal Housing Finance Agency

Authority of the Former Inspector General for the

Federal Housing Finance Board to Act as Inspector

General for the Federal Housing Finance Agency

The Federal Housing Finance Board Inspector General did not by statute automatically

acquire authority to act as Inspector General for the Federal Housing Finance Agency

at the time of the enactment of the Federal Housing Finance Regulatory Reform Act of

2008.

The former Federal Housing Finance Board Inspector General cannot appoint employees

to the Office of Inspector General for the Federal Housing Finance Agency.

September 8, 2009

MEMORANDUM OPINION FOR THE GENERAL COUNSEL

FEDERAL HOUSING FINANCE AGENCY

The Federal Housing Finance Regulatory Reform Act of 2008 (“Re-

form Act”), which Congress passed as division A of the Housing and

Economic Recovery Act of 2008, Pub. L. No. 110-289, 122 Stat. 2654,

2659, abolished the Federal Housing Finance Board (“FHFB”), an inde-

pendent agency that oversaw the Federal Home Loan Banks, see 12

U.S.C. § 1422a (2006). The Reform Act established in place of the FHFB

a new entity called the Federal Housing Finance Agency (“FHFA”). The

FHFA now regulates and supervises “government sponsored enterprises”

(“GSEs”) supporting mortgage markets, and this responsibility extends

not only to the Federal Home Loan Banks, but also to the Federal Nation-

al Mortgage Association (commonly known as “Fannie Mae”) and the

Federal Home Loan Mortgage Corporation (commonly known as “Freddie

Mac”). See Reform Act §§ 1002, 1101, 1102, 1311.

You have asked for our opinion on three questions about the Office of

Inspector General of the FHFA: (1) whether by statute the former Inspec-

tor General for the FHFB at the time of the Reform Act’s enactment

automatically can act as Inspector General for the FHFA pending the

appointment of an Inspector General for the FHFA; (2) whether the for-

mer Inspector General for the FHFB has authority to appoint employees to

the Office of Inspector General for the FHFA; and (3) whether employees

of the Office of Inspector General for the FHFA are paid at FHFA pay

rates or general federal employee pay rates.

318

Authority of Former IG for FHFB to Act as IG for FHFA

For the reasons given below, we conclude that: (1) the FHFB Inspector

General at the time of the Reform Act’s enactment did not by statute

automatically acquire authority to act as Inspector General for the FHFA;

and, accordingly, (2) the former FHFB Inspector General cannot appoint

employees to the Office of Inspector General for the FHFA. In light of

these conclusions, we express no view as to what pay rates apply to em-

ployees of the FHFA Office of Inspector General.

I.

A.

Congress passed the Reform Act to ensure that the GSEs supporting

mortgage markets—specifically, Fannie Mae, Freddie Mac, and the

Federal Home Loan Banks—“operate in a safe and sound manner and

fulfill the missions assigned under their charters.” H.R. Rep. No. 110 -142,

at 87 (2007). Fannie Mae and Freddie Mac are congressionally chartered

entities that promote liquidity in residential mortgage markets by purchas-

ing residential mortgages from lenders. See 12 U.S.C.A. §§ 1451, 1452,

1454, 1455, 1717, 1718, 1719 (West 2001 & Supp. 2009); H.R. Rep.

No. 110-142, at 95. These GSEs, though established by statute and given

special privileges not available to private firms, may issue securities to

investors. See 12 U.S.C.A. §§ 1453, 1454, 1455, 1716, 1717, 1718, 1719

(West 2001 & Supp. 2009); H.R. Rep. No. 110-142, at 95. They generally

finance mortgage purchases either by issuing debt securities or by packag-

ing mortgages into so-called “mortgage-backed securities.” See H.R. Rep.

No. 110-142, at 95. The Federal Home Loan Banks are regional entities

cooperatively owned by member financial institutions. See 12 U.S.C.A.

§§ 1423, 1424, 1426 (West 2001 & Supp. 2009); H.R. Rep. No. 110 -142,

at 95. Like Fannie Mae and Freddie Mac, they were established by statute

to provide liquidity to residential mortgage lenders; they typically pursue

this objective by providing collateralized financing to member institu-

tions. See 12 U.S.C.A. §§ 1429, 1430, 1431 (West 2001 & Supp. 2009);

H.R. Rep. No. 110 -142, at 95.

Before the Reform Act, the Office of Federal Housing Enterprise Over-

sight (“OFHEO”), an office within the Department of Housing and Urban

Development (“HUD”) headed by a presidentially-appointed and Senate-

confirmed Director, oversaw the “safety and soundness” of Fannie Mae

319

33 Op. O.L.C. 318 (2009)

and Freddie Mac, while the HUD Secretary supervised these GSEs in

other respects, including compliance with certain affordable-housing

mandates. See 12 U.S.C. §§ 4502(6), 4511, 4512, 4513, 4541, 4563

(2006); H.R. Rep. No. 110 -142, at 95. The FHFB, an independent agency

within the executive branch, oversaw the Federal Home Loan Banks.

See 12 U.S.C. §§ 1422, 1422a, 1422b (2006).

In the Reform Act, Congress abolished OFHEO and the FHFB and

assigned regulatory and supervisory responsibility for Fannie Mae (and

any Fannie Mae affiliates), Freddie Mac (and any Freddie Mac affiliates),

and the Federal Home Loan Banks to a new independent agency, the

FHFA. See Reform Act §§ 1101, 1301, 1311; 12 U.S.C.A. § 4511 (West

Supp. 2009). The FHFA is headed by a “Director,” who receives advice

“with respect to overall strategies and policies” from a “Federal Housing

Finance Oversight Board” composed of the Director, the Secretary of

the Treasury, the Secretary of HUD, and the Chairman of the Securities

and Exchange Commission. Reform Act § 1101; 12 U.S.C.A. §§ 4512,

4513, 4513a (West Supp. 2009). The FHFA Director has substantial

regulatory powers over the covered GSEs, including the authority to place

regulated GSEs in receivership or conservatorship in certain circum-

stances. See, e.g., Reform Act §§ 1108, 1113, 1128, 1144, 1145, 1205;

12 U.S.C.A. §§ 1430c, 4513b, 4518, 4561, 4616, 4617 (West Supp.

2009). The Director also holds authority, subject to certain transition

provisions discussed below regarding FHFB, OFHEO, and HUD employ-

ees, to “appoint and fix the compensation of such officers and employees

of the Agency as the Director considers necessary to carry out the func-

tions of the Director and the Agency.” 12 U.S.C.A. § 4515(a) (West Supp.

2009). These officers and employees “may be paid without regard to the

provisions of chapter 51 and subchapter III of chapter 53 of Title 5 relat-

ing to classification and General Schedule pay rates.” Id. Although the

FHFA Director “shall be appointed by the President, by and with the

advice and consent of the Senate,” the Reform Act provides that in the

event of a vacancy in this position on the Act’s effective date, “the person

serving as the Director of the Office of Federal Housing Enterprise Over-

sight of the Department of Housing and Urban Development on that

effective date shall act for all purposes as, and with the full powers of,

the Director” until an initial Director is appointed. Reform Act § 1101;

12 U.S.C.A. § 4512(b)(1), (5).

320

Authority of Former IG for FHFB to Act as IG for FHFA

B.

The Reform Act also provides for the appointment of an Inspector Gen-

eral for the FHFA. Specifically, the statute amends the Inspector General

Act of 1978 (“IG Act”), 5 U.S.C.A. app. (West 2007 & Supp. 2009), to

include the FHFA among the federal “establishments” in which “an office

of Inspector General” “is established.” Reform Act § 1105(c); IG Act

§§ 2, 12(2). The Reform Act also specifies that “[t]here shall be within

the [FHFA] an Inspector General, who shall be appointed in accordance

with section 3(a) of the Inspector General Act of 1978,” Reform Act

§ 1105(a)(5), which provides that the Inspector General “shall be appoint-

ed by the President, by and with the advice and consent of the Senate,”

IG Act § 3(a). Under the Inspector General Act, the Inspectors General

for “establishments” like the FHFA have broad authority to conduct

investigations with respect to programs and operations of the establish-

ment. Id. §§ 4, 5. To carry out their functions, Inspectors General may

select, appoint, and employ such officers and employees as may be

necessary for carrying out the functions, powers, and duties of the

Office subject to the provisions of Title 5, United States Code, gov-

erning appointments in the competitive service, and the provisions of

chapter 51 and subchapter III of chapter 53 of such title relating to

classification and General Schedule pay rates.

Id. § 6(a)(7). Although each such Inspector General “shall report to and

be under the general supervision of the head of the establishment” (here

the FHFA Director) or, if this power is delegated, “the officer next in rank

below such head,” id. § 3(a), only the President may remove the Inspector

General, id. § 3(b), and “[n]either the head of the establishment nor the

officer next in rank below such head shall prevent or prohibit the Inspec-

tor General from initiating, carrying out, or completing any audit or

investigation, or from issuing any subpena during the course of any audit

or investigation,” id. § 3(a).*

* The Inspector General Act also includes special provisions, not relevant here, gov-

erning the powers and duties of Inspectors General at particular agencies. See, e.g., IG

Act §§ 8–8K.

321

33 Op. O.L.C. 318 (2009)

C.

Despite “abolish[ing]” OFHEO and the FHFB effective one year after

the statute’s enactment, the Reform Act guarantees that each employee of

these agencies “shall be transferred to the [FHFA] for employment” in “a

position with the same status, tenure, grade, and pay as that held on the

day immediately preceding the transfer.” Reform Act §§ 1301, 1303,

1311, 1313. Permanent employees transferred under this provision “may

not be involuntarily separated or reduced in grade or compensation during

the 12-month period beginning on the date of transfer, except for cause.”

Id. §§ 1303(b)(2), 1313(b)(2). Similarly, a temporary employee may be

separated only “in accordance with the terms of the appointment of the

employee.” Id.

The Reform Act likewise provides that certain HUD employees—those

“whose position responsibilities primarily involve the establishment and

enforcement of the housing goals under subpart B of part 2 of subtitle A

of the Federal Housing Enterprises Financial Safety and Soundness Act

of 1992 (12 U.S.C. 4561 et seq.)”—“shall be transferred to the [FHFA]

for employment.” Id. § 1133(a). The Act gives these employees equiva-

lent protections against involuntary separation or reduction in grade or

compensation as are applied to transferred OFHEO and FHFB personnel.

Id. § 1133.

II.

You have taken the view that because the position of FHFA Inspector

General is a new office requiring presidential nomination and Senate

confirmation under the Reform Act, this office must remain vacant until

an Inspector General for the FHFA is properly appointed. Under your

view, because the President has not designated the former FHFB Inspector

General to act as Inspector General for the FHFA, the former Inspector

General may not exercise the powers and duties of the FHFA Inspector

General. The former FHFB Inspector General argues, in contrast, that

he automatically assumed these powers and duties by operation of the

Reform Act. We do not understand the former FHFB Inspector General

to assert that the Reform Act made him the Inspector General for the

FHFA. But he does assert that, by virtue of the Reform Act’s transition

provisions, he may exercise the powers of the FHFA Inspector General

322

Authority of Former IG for FHFB to Act as IG for FHFA

“in trust until the President of the United States appoints a new Inspector

General.” Memorandum for Edward DeMarco, Deputy Director, FHFA,

from Edward Kelley, Re: Inspector General Authority at 2 (July 7, 2009).

In defense of this view, he contends that “the Congress clearly intended

the continuation of the Office of Inspector General within the [FHFA]”

and that “[t]he senior official of the FHFA Office of Inspector General

has the duty and responsibility to conduct the affairs of the Office of

Inspector General as envisioned by Congress.” Id. at 3. The former FHFB

Inspector General thus asserts that, in the capacity of acting head of

the FHFA Office of Inspector General, he may hire personnel for that

office and that he may employ such personnel at FHFA-specific pay rates,

without regard to the General Schedule applicable to most federal em-

ployees.

In our judgment, the applicable statutes do not enable the former FHFB

Inspector General to exercise the authority he claims. By its terms, the

Reform Act nowhere expressly empowers the former FHFB Inspector

General—or, for that matter, any other specific official—to perform the

functions and duties of the FHFA Inspector General before an appoint-

ment of an FHFA Inspector General by the President. The Reform Act,

rather, incorporates the relevant provisions of the Inspector General Act

of 1978 and so provides for the appointment of the FHFA Inspector

General by the President with the advice and consent of the Senate. See

Reform Act § 1105(a)(5); IG Act § 3(a). By contrast, the Inspector Gen-

eral of the FHFB was appointed by the agency head. See IG Act § 8G.

A general provision in the Reform Act does guarantee that each former

FHFB employee “shall be transferred to the [FHFA] for employment”

in “a position with the same status, tenure, grade, and pay as that held on

the day immediately preceding the transfer.” Reform Act §§ 1313(a),

(b)(1). We do not believe, however, that this section supports the former

FHFB Inspector General’s argument. As this Office has indicated in a

prior opinion, transitional protections like these provisions of the Reform

Act may be suitable where, as here, an agency is empowered to hire

employees without regard to usual civil service protections. See Appli-

cability of the Civil Service Provisions of Title 5 of the United States

Code to the United States Enrichment Corporation, 17 Op. O.L.C. 27, 29

(1993). We thus concluded in our prior opinion that a provision guaran-

teeing the same “compensation, benefits, and other terms and conditions

of employment in effect immediately prior to” an employee’s transfer to

323

33 Op. O.L.C. 318 (2009)

the new agency “reflect[ed] Congress’s assumption that [the agency in

question] would be free to set the terms and conditions of employment for

its employees [without regard to civil service laws], because if [the agen-

cy] were bound by civil service statutes Congress would not have needed

to guarantee transferred employees their existing employment terms and

conditions.” Id. By the same token, we understand the Reform Act’s

guarantee of identical “status, tenure, grade, and pay” to ensure that,

despite the FHFA Director’s authority to “appoint and fix the compensa-

tion of” FHFA officers and employees without regard to generally appli-

cable federal pay rates, see 12 U.S.C.A. § 4515(a), employees transferred

from the FHFB to the FHFA arrive with the same overall terms and condi-

tions of employment that they enjoyed previously. The companion provi-

sion barring involuntary separation or reduction in “grade or compensa-

tion” without cause then ensures that—again despite the FHFA Director’s

appointment authority and general exemption from usual federal pay

scales—the Director may not reassign such employees or reclassify their

positions in a manner that results in a reduction in grade or pay during

their first year at the FHFA. See Reform Act § 1313(b)(2). Consistent

with this interpretation, the House Financial Services Committee’s report

on an earlier version of this legislation referred to comparable language

as ensuring that former FHFB employees “will be guaranteed a position

with the [FHFA] and will retain their benefits for one year following the

transfer.” H.R. Rep. No. 110-142, at 147.

Accordingly, even assuming the terms “status” and “tenure” might oth-

erwise be given a broader construction, we do not understand these terms

in this context to guarantee any specific title, duties, or responsibilities

to transferred employees. See, e.g., Dolan v. U.S. Postal Serv., 546 U.S.

481, 486 (2006) (“Interpretation of a word or phrase depends upon read-

ing the whole statutory text, considering the purpose and context of the

statute, and consulting any precedents or authorities that inform the analy-

sis.”). To the contrary, as you have suggested (and as the FHFB Inspector

General does not dispute), we understand the terms “status, tenure, grade,

and pay” to refer to the transferred employee’s prior competitive or ex-

cepted-service status, cf. 5 C.F.R. § 212.301 (2009) (defining “competi-

tive status”), permanent or temporary tenure, pay grade, and compensa-

tion. This interpretation gives the four conjoined terms—“status, tenure,

grade, and pay”—a consistent overall meaning: all refer to general terms

and conditions of employment relating to compensation, seniority, and

324

Authority of Former IG for FHFB to Act as IG for FHFA

job security. See, e.g., Dole v. Steelworkers, 494 U.S. 26, 36 (1990)

(“words grouped in a list should be given related meaning” (internal

quotation marks omitted)). In addition, while construing “status” and

“tenure” to encompass job duties and responsibilities might severely

constrain the FHFA Director’s authority over the organization of the

Agency, our interpretation preserves the Director’s broad authority, ex-

pressly provided by Congress, to determine functions within the FHFA

by “delegat[ing] to officers and employees of the Agency any of the

functions, powers, or duties of the Director.” Reform Act § 1102(a);

12 U.S.C.A. § 4513(b); see also Reform Act § 1101; 12 U.S.C.A.

§ 4512(c), (d), (e) (establishing Deputy FHFA Directors for “enterprise

regulation,” “federal home loan bank regulation,” and “housing mission

and goals,” but providing that, within these broad subject-matter domains,

the Deputy Directors “shall have such functions, powers, and duties . . .

as the Director shall prescribe”). Finally, our interpretation harmonizes

the meaning of the FHFB transition provision with a related statute,

5 U.S.C. § 3503, referenced in the transition provision itself. Reform Act

section 1313(a) states that a transfer of employees under this provision

“shall be deemed a transfer of function for purposes of” this statute, which

provides that “[w]hen a function is transferred from one agency to anoth-

er, each competing employee in the function shall be transferred to the

receiving agency for employment in a position for which he is qualified

before the receiving agency may make an appointment from another

source to that position,” 5 U.S.C. § 3503(a) (2006). In accordance with

our construction of section 1313 here, the language of section 3503 has

been construed to require only that “an employee is entitled to ‘a job’ for

which he is qualified,” not “the position most similar to [the employee’s]

former job.” Ross v. United States, 566 F. Supp. 1024, 1027–28 & n.5

(D.D.C. 1982).

In contrast with the general transition provisions of section 1313, which

do not expressly purport to assign duties, the Reform Act contains one

provision about transition that does expressly assign duties. Section 1101

of the Reform Act provides that the former OFHEO Director may act as

FHFA Director in the event of an initial vacancy in that post. See Reform

Act § 1101; 12 U.S.C.A. § 4512(b)(5). That discrete transition provision

would have been superfluous if section 1133(b)(1) by itself constituted a

general assignment of identical duties to all former FHFB employees and

thus to the FHFB Inspector General. That provision also shows that Con-

325

33 Op. O.L.C. 318 (2009)

gress recognized the possibility of initial vacancies in positions at the

FHFA, yet made no provision for an interim acting Inspector General.

“‘[W]here Congress includes particular language in one section of a

statute but omits it in another section of the same Act, it is generally

presumed that Congress acts intentionally and purposely in the disparate

inclusion or exclusion.’” Russello v. United States, 464 U.S. 16, 23 (1983)

(quoting United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir.

1972)); see also, e.g., General Motors Corp. v. United States, 496 U.S.

530, 538 (1990) (reading statute not to impose a specific deadline on a

certain regulatory action because “the statutory language does not ex-

pressly impose a . . . deadline and Congress expressly included other

deadlines in the statute”); TRW Inc. v. Andrews, 534 U.S. 19, 28 (2001)

(holding that “[t]he most natural reading” of a statute is “that Congress

implicitly excluded a general . . . rule by explicitly including a more

limited one”).

The absence of an express provision providing for such an assignment

of duties is also significant in light of the Federal Vacancies Reform Act

of 1998 (“Vacancies Reform Act”), Pub. L. No. 105-277, div. C, § 151,

112 Stat. 2681, 2681- 611 (as amended). The Vacancies Reform Act

provides that, absent a recess appointment or an “express[]” statutory

provision to the contrary, it is “the exclusive means for temporarily au-

thorizing an acting official to perform the functions and duties of any

office of an Executive agency . . . for which appointment is required to be

made by the President, by and with the advice and consent of the Senate.”

5 U.S.C. § 3347(a) (2006). Yet the Vacancies Reform Act provides only

that “[i]f an officer of an Executive agency . . . whose appointment to

office is required to be made by the President, by and with the advice and

consent of the Senate, dies, resigns, or is otherwise unable to perform the

functions and duties of the office,” either the “first assistant to the office”

or another officer designated by “the President (and only the President)”

may, within certain time limits, “perform the functions and duties of the

office temporarily in an acting capacity.” Id. §§ 3345, 3346. We have

doubts that the Vacancies Reform Act authorizes interim assignments to

fill initial vacancies. If, as in this case, no one has previously been ap-

pointed to an office, there is no officer who has “die[d]” or “resign[ed]”

or “is otherwise unable to perform the functions and duties of office,” and

there thus is no vacancy that the Vacancies Reform Act allows to be

filled. Cf. Olympic Fed. Sav. & Loan Ass’n v. Office of Thrift Supervision,

326

Authority of Former IG for FHFB to Act as IG for FHFA

732 F. Supp. 1183, 1195 (D.D.C.) (construing term “required by law to be

appointed” in prior vacancies statute to permit temporary filling of vacan-

cies only where the officer vacating the position was properly appointed

and had thus “take[n] office”), appeal dismissed as moot, 903 F.2d 837

(D.C. Cir. 1990). But even assuming that the Vacancies Reform Act

would permit someone to be named acting FHFA Inspector General in this

case, the former FHFB Inspector General’s own submission shows that he

is neither a properly appointed first assistant nor an officer designated by

the President to act as FHFA Inspector General.

To be sure, the Inspector General Act, as amended by the Reform Act,

provides that “there is established” within the FHFA “an office of Inspec-

tor General.” IG Act § 2. But even assuming that this entity has inherent

functions that its personnel may perform even without a properly appoint-

ed or designated Inspector General or acting Inspector General at the head

of the office, neither the Reform Act nor the Inspector General Act sup-

ports the former FHFB Inspector General’s view that the FHFA Office of

Inspector General was automatically populated with former personnel of

the FHFB Office of Inspector General by operation of the Reform Act’s

transition provisions. To the contrary, in the Reform Act, Congress “abol-

ished” the FHFB, including its Office of Inspector General, and estab-

lished a new agency, the FHFA, with its own Inspector General. See

Reform Act §§ 1101, 1301, 1311. And while Congress provided for the

transfer of FHFB personnel to the FHFA, the statute, as noted, does not

guarantee these employees any particular substantive responsibilities.

See id. § 1313; cf. Ross, 566 F. Supp. at 1028. Accordingly, although the

FHFA Office of Inspector General might well be the natural place for

transferred former employees of the FHFB Inspector General, the statute

does not provide for the automatic transformation of the abolished FHFB

Office of Inspector General into a new FHFA Office of Inspector General.

Finally, our conclusion that the Reform Act should not be construed

to have authorized the former FHFB Inspector General to act as FHFA

Inspector General draws support from the fact that the offices of FHFB

Inspector General and FHFA Inspector General do not have essentially

equivalent jurisdiction. The Supreme Court has held that Congress may

assign new duties to an officer without creating a new office, provided the

new duties are “germane to the office[] already held by” the incumbent,

Shoemaker v. United States, 147 U.S. 282, 301 (1893); see also The

Constitutional Separation of Powers Between the President and Congress,

327

33 Op. O.L.C. 318 (2009)

20 Op. O.L.C. 124, 157–59 (1996), but this Office has indicated that the

Constitution may require a new appointment when the addition of new

duties—even duties “germane” to an existing office—is “considerable.”

Status of the Director of Central Intelligence Under the National Security

Intelligence Reform Act of 2004, 29 Op. O.L.C. 28, 36 n.2 (2005); see

also Constitutional Separation of Powers, 20 Op. O.L.C. at 158 (indicat-

ing that whether Congress has created a new office depends on “the

reasonableness of assigning the new duties ‘in terms of efficiency and

institutional continuity’” and on “whether ‘it could be said that [the offic-

ers’] functions . . . [with the additional duties] were within the contem-

plation of those who were in the first place responsible for their appoint-

ment and confirmation’” (quoting Legislation Authorizing the Transfer of

Federal Judges from One District to Another, 4B Op. O.L.C. 538, 541

(1980))); Olympic Fed. Sav. & Loan Ass’n, 732 F. Supp. at 1193. Without

deciding the constitutional issue here, we note that the FHFA Inspector

General holds materially broader statutory responsibility than did the

FHFB Inspector General. While the FHFB oversaw only the Federal

Home Loan Banks, the FHFA also regulates Fannie Mae and Freddie

Mac—two major financial institutions, see H.R. Rep. No. 110-142, at 96.

As the Reform Act itself indicates, oversight of Fannie Mae and Freddie

Mac may raise different regulatory concerns from oversight of the Federal

Home Loan Banks; the Reform Act thus requires the FHFA Director to

“consider the differences between the Federal Home Loan Banks and

[these] enterprises” before issuing any regulations or general guidance

affecting the Federal Home Loan Banks. See Reform Act § 1201; 12

U.S.C.A. § 4513(f). Furthermore, the FHFA appears to hold broader

powers than OFHEO or the FHFB expressly had, including the power to

place GSEs in receivership in certain circumstances. See Reform Act

§ 1145; 12 U.S.C.A. § 4617; H.R. Rep. No. 110-142, at 90.

Consequently, the FHFA Inspector General conducts investigations

with respect to an agency with substantially broader functions, powers,

and responsibilities than did the FHFB Inspector General. Perhaps not

surprisingly, while the statute establishing the FHFB provided that its

Inspector General was to be appointed by the agency head, see IG Act

§ 8G, the Reform Act provides for appointment of FHFA’s Inspector

General by the President with the advice and consent of the Senate. That

distinction between the offices is thus also in keeping with our conclusion

that the Reform Act cannot be read to have automatically, by implication,

328

Authority of Former IG for FHFB to Act as IG for FHFA

given the former FHFB Inspector General authority to act as Inspector

General for the FHFA.

III.

In sum, neither the Reform Act nor the Vacancies Reform Act author-

izes the former FHFB Inspector General to assume the functions and

duties of the FHFA Inspector General pending appointment of a new

nominee. The answer to your second question—whether the former FHFB

Inspector General has authority to appoint staff to the FHFA Office of

Inspector General—follows logically from this answer. The Inspector

General Act authorizes only the Inspector General to “select, appoint, and

employ such officers and employees as may be necessary for carrying out

the functions, powers, and duties of the Office.” IG Act § 6(a)(7). Thus,

because the former FHFB Inspector General lacks authority to act as

FHFA Inspector General, he cannot hire staff for the FHFA Inspector

General’s office. And because we conclude that the former FHFB Inspec-

tor General cannot hire staff in the FHFA Office of Inspector General, we

need not determine at this time what pay rates would apply to any em-

ployees who are hired in the future. We therefore do not address your

third question.

Insofar as the absence of an Inspector General creates practical difficul-

ties for the FHFA, we note that the Reform Act authorizes the FHFA

Director to “delegate to officers and employees of the [FHFA] any of

the functions, powers, or duties of the Director, as the Director considers

appropriate.” Reform Act § 1102(a); 12 U.S.C.A. § 4513(b). As you

have suggested, this authority might permit the Director to give designat-

ed employees certain responsibilities for auditing and monitoring the

FHFA’s activities.

DANIEL L. KOFFSKY

Deputy Assistant Attorney General

Office of Legal Counsel

329