Rep. Darrell Issa

House Committee Investigates Cost of Federal Housing Finance Agency RMBS Lawsuits

The House Committee on Oversight and Government Reform, as part of its ongoing monitoring of the Federal Housing Finance Agency (“FHFA”), is investigating the cost to the government of numerous lawsuits against financial institutions brought on behalf of Fannie Mae and Freddie Mac by Quinn Emanuel and Kasowitz Benson. In a September 29, 2011 letter to the Acting Director of the FHFA, Rep. Darrell Issa (R-Cal.), Chairman of the committee, requested detailed information about the FHFA’s decision-making process in selecting counsel, the terms of the representation agreements with each firm, the expected value of the lawsuits, and the expected cost of the representations. Rep. Issa requested an explanation of the FHFA’s decision to use private law firms instead of government lawyers and also requested copies of all RMBS-related communications between the FHFA and the Department of Justice or other government agencies. Rep. Issa asked the FHFA to respond by October 13. Letter.

Letter from the SEC to Rep. Darrell Issa on Capital Formation and Section 12(g) of the Securities Exchange Act

On April 6, SEC Chairman Schapiro issued a public letter to Rep. Darrell Issa, Chairman of the Committee on Oversight and Governmental Reform, in response to his letter on March 22 concerning the SEC and capital formation. Among the items discussed in the letter, Chairman Schapiro addressed Section 12(g) of the Exchange Act and the limit of 500 holders of record before a company must register its securities with the SEC. In light of the burdensome nature of registering the securities of smaller companies as well as the ability of much larger companies to aggregate multiple shareholders under a single holder of record, thereby avoiding registration, Chairman Schapiro stated, “I believe that both the question of how holders are counted and how many holders should trigger registration need to be examined.” SEC Letter.