Edward Demarco is the acting director of the Federal Housing Finance Agency ("FHFA"). FHFA regulates Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac are known as Government Sponsored Enterprise ("GSE"). GSE's are private companies except that they are chartered and regulated by Congress; and get a great deal of financial support from taxpayers. Currently, GSE's are not subject to the FOIA.
Fannie Mae and Freddie Mac are are under federal conservatorship because they are billions of dollars in debt. There are a number of bills pending in Congress amending how the federal funding of mortgages should work, many change the structure of Fannie Mae and Freddie Mac. One makes these entities subject to the FOIA.
This week, MarketWatch reports that Demarco testified to Congress and stated that Fannie Mae and Freddie Mac should not be subject to the FOIA.
I don't know anything about Mr. Demarco, but he is 100 percent wrong. GSE's get special benefits from the government -- as such they owe it to those people funding them to be fully transparent. And those people are taxpayers. The way for this transparency is by making them subject to the FOIA. Demarco is right that there may be additional costs -- such as processing FOIA requests and paying lawyers when FOIA requests go to litigation, but that reasoning could be expanded to all of government -- it costs money so we should get rid of FOIA altogether. Mr. Demarco isn't looking at the big picture; he is looking at it inside his box as a professional regulator of two failed entities -- by making GSE's transparent, money will be saved in the long run because money losing schemes will be discovered years before FHFA finds them and does anything about them. Regulators like Demarco don't want reporters and/or regular citizens looking into what their regulated entities are doing and questiong both the entities and the regulators. However, for a democracy to work effectively, there are checks and balances and one of them is that transparency allows all to see how things are working, not just the regulators. Mr. Demarco is merely protecting his turf -- and his comments should be seen in that light.
Congress should immediately act to make Fannie Mae and Freddie Mac subject to the FOIA. Further, they should make other GSE's such as the Public Corporation Accounting Oversight Board ("PCAOB") subject to the FOIA as well. America will be better for it.