"The report released today by the GAO raises serious concerns about certain actions taken at the Federal Housing Finance Board (FHFB) under Chairman Korsmo's direction.

"Last August, Chairman Korsmo implemented a significant restructuring of the agency without consultation or input from other directors. In light of this action, the GAO reviewed the Finance Board's broad delegation of authority to its Chairman, which was cited by Chairman Korsmo to justify his decision to proceed with the restructuring unilaterally. The GAO found that the FHFB Chair has 'more power to make key administrative decisions than the chairs at five of the six other financial regulatory agencies that we reviewed' - the SEC, the Farm Credit Administration, the Federal Reserve, the CFTC, and the NCUA - and that the delegation 'prevents the full board from participating in key administrative decisions that have potential policy implications.'

"Particularly troubling is the GAO's conclusion that this broad delegation 'potentially frustrates one of Congress' objectives in establishing a board to regulate the FHLBank System. That is, the board structure is designed to help ensure that key decisions benefit from the experiences and perspectives of all board members.' Unfortunately, Chairman Korsmo has opposed amending this delegation to allow for full board participation in such decisions.

"Moreover, in its review of personnel actions taken in connection with the August 2002 restructuring, the GAO found that 'FHFB took certain actions in conducting a RIF [reduction-in-force] that were not fully consistent with federal age discrimination statutes and regulations.' For example, the GAO found that the settlement agreements offered to terminated employees included a provision requiring employees who signed them to agree not to file a complaint with the Equal Employment Opportunity Commission (EEOC). The GAO states that, 'This provision in the settlement agreement does not comply with EEOC regulations implementing the Age Discrimination in Employment Act.' The GAO has informed the EEOC of its findings in this area.

"I will continue to monitor developments in these areas as they occur."