Accuser Says Fannie-Freddie Regulator Made Her Feel ‘Unsafe’

(Bloomberg) -- Allegations that Federal Housing Finance Authority Director Mel Watt sexually harassed a female subordinate will likely continue casting a shadow over his final months in office after lawmakers criticized his handling of the claims and vowed to keep investigating.

At a congressional hearing Thursday, Watt’s accuser, Simone Grimes, said he created an “unsafe” work environment by engaging in years of harassment. In his own testimony, Watt said courts will confirm he acted within the law and argued Congress isn’t the appropriate venue to assess the case. Still, politicians from both sides of the aisle vowed to press on while faulting his refusal to participate in one of several ongoing inquiries.

The showdown before the House Financial Services Committee came on the same day the Senate was absorbed with its own examination of misconduct allegations: the testimonies of Supreme Court nominee Brett Kavanaugh and a woman who has accused him of sexual assault. The dueling hearings crystallized that the #MeToo movement that has swept through corporate America is now firmly capturing Washington’s attention.

The U.S. Postal Service and the FHFA’s Inspector General are looking into the accusations leveled by Grimes, a senior adviser at the agency. Watt has declined to participate in the Postal Service probe, citing his status as a presidential appointee. Jeb Hensarling, the committee’s Republican chairman, warned he will subpoena Watt if the Fannie Mae and Freddie Mac regulator doesn’t cooperate with the inquiry.

‘Extraordinarily Uncomfortable’

But the panel’s leaders stopped short of saying that Watt -- a former Democratic congressman from North Carolina -- should step down.

“I would not even begin to address that until all the investigations are finished," Congresswoman Maxine Waters, its Democrat, said in an interview.

“It will be up to the president” to determine whether Watt should stay, Hensarling said in an interview. Grimes, he noted, “didn’t just bring testimony she brought evidence” that the administration can consider.

Grimes described feeling “uncomfortable” and “vulnerable” whenever she met with Watt to discuss her pay. She also said her experience shows that a system meant to protect victims is “hostile” and seriously “flawed.”

“I felt extraordinarily uncomfortable and unsafe," Grimes said when describing how Watt would insist on meeting with her privately in "unusual" locations to discuss her career.

Grimes’ Recordings

In his testimony, Watt reiterated his confidence that investigations will exonerate him. He said an independent review confirmed he and Grimes never engaged in any sexual activity, and that he never groped her or even held her hand. The outcome of two pending lawsuits will “confirm that I did not take any actions or engage in any conduct that was contrary to law,” Watt defiantly told lawmakers.

Grimes shared recordings of conversations between her and Watt with lawmakers, interactions that she said she started taping to document his abuse. In one recording, heard by Bloomberg, Watt acknowledges that Grimes refused his advances “much to my disappointment.”

“I’m guilty of having an attraction to you, that is true,” Watt said in November 2016, according to the recording. “What I’ve talked to you about up to this point has nothing to do with either your beauty or my feelings. But I can’t eliminate the feelings or the beauty.”

In another transcript of a recording, seen by Bloomberg, Watt allegedly asked her about a tattoo on her ankle and asked, “If I kissed that one would it lead to more?"

Watt blasted Grimes for “selectively” leaking portions of their interactions to the media. He said he felt her actions betrayed a genuine friendship between the two of them.

“I have a long history of having successfully mentored numerous employees,” said Watt, an appointee of former President Barack Obama whose term ends in January. Grimes is “someone who I considered” a mentee and she had been “systematically laying the groundwork” to make these accusations, he said.

Representative Dave Trott, a Republican from Michigan, asked Watt whether it was appropriate to discuss having an attraction to a female subordinate. Watt replied that it was, and that it’s important for a mentor to clarify what the expectations are "if they are giving the wrong vibrations." Watt also said he did not recall some specific allegations that Grimes made, including discussing her tattoo.

Watt in his testimony also called himself a “big supporter” of the #MeToo movement, but said mere allegations shouldn’t override the rights of those accused of misconduct to defend themselves under the legal process.

In laying out her allegations, Grimes told lawmakers that when she raised formal complaints over harassment and unfair pay, FHFA officials subjected her to "bullying" and "public shaming.” Grimes also asserted that an investigation by the FHFA inspector general’s office into her claims hasn’t been conducted fairly.

‘Significant Misunderstandings’

FHFA Inspector General Laura Wertheimer, also testifying Thursday, defended her office’s independence. She told lawmakers that “there seems to be significant misunderstandings about our work.”

In a Thursday statement, the FHFA said it “takes allegations of discrimination and sexual harassment very seriously.” The regulator noted that, in addition to the inspector general probe, two other investigations are being conducted into Grimes’s claims.

Hensarling said that Grimes’s accusations show the FHFA is in “dire need of oversight.”

“There is something amiss at FHFA and this committee has to get to the bottom of it," he said.

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