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FHFA special advisor Simone Grimes details sexual harassment allegations against Mel Watt

Tells House committee that culture at agency is rotting

Simone Grimes, the woman accusing Federal Housing Finance Agency Director Mel Watt of sexual harassment, testified before the House Financial Services Committee on Thursday.


Grimes is currently a special advisor at the FHFA and has been with the agency since December 2014.

In her testimony, Grimes issued three points of complaint toward the FHFA Office of Inspector General and Watt.

First, she said there was a lack of communication or corrective action after the investigation concluded.

According to Grimes, the U.S. Postal Service investigation into her case wrapped up on Aug. 13th, but the FHFA did not make her aware that the investigation was finished or that a 600-page report had been written and issued to the FHFA regarding the case. According to Grimes, the agency had been sitting on the report for more than 30 days.

Grimes said that she reached out to human resources as well as the agency’s outside counsel and never heard back from them regarding the status of the report or next steps.

“The act of not providing a timely response to an aggrieved party of a harassment complaint serves the same effect as the harassment itself,” Grimes told the committee.

“It is dismissive, demeaning and serves to delegitimize the complainant and the complaint,” she added.

Her second charge was against Watt for refusing to participate in an investigation into his alleged misconduct.

In a letter to the USPS investigator, Watt indicated that he does not see himself as an employee of the FHFA and is therefore not subject to its employee policies.

Grimes said that Watt’s cavalier attitude has put a chill on the morale of the agency.

“The actions of director Watt, and by extension the lack of actions from his senior staff, have served to chip away at the culture of pride, ethics and integrity that had existed at FHFA,” Grimes said. 

Her third charge was against the agency and its inspector general for attempting to intimidate and embarrass her for coming forward with these allegations.

She reiterated that her complaints have always been laced with concern that the FHFA and its inspector general are too close to one another and lack the independence necessary to function with integrity.

Grimes said her interactions with Inspector General Laura Wertheimer and her staff have been hostile.

She accuses Wertheimer and her staff of bullying, intimidating and publicly shaming her.

In response to Grimes’ allegations against Watt, the inspector general made Grimes’ identity a matter of public record by suing her in court under her full name.

Grimes holds that this could have been done in a number of other ways that would not have revealed her identity.

"The act of publicly shaming me serves to prevent other women from coming forward. I did not ask to be named," Grimes said.

In addition, the OIG wrote to Grimes telling her that it would delay any alternate dispute resolution or meditation related to her claim until she cooperated more fully with the OIG, which she believed should have recused itself for conflicts of interest.

Finally, the OIG blocked Grimes’ promotion to an executive-level position until it had reviewed her allegations against Director Watt.

In response to these allegations and today's hearing, the FHFA issued this statement:

The Federal Housing Finance Agency takes allegations of discrimination and sexual harassment very seriously. In addition to an independent investigation being conducted by the FHFA Office of Inspector General, there are two other investigations of these allegations. One is an investigation under federal Equal Employment Opportunity laws and regulations being conducted by another federal agency on behalf of FHFA. The other is an investigation under the Agency’s Anti-Harassment Policy, conducted by the U.S. Postal Service on behalf of FHFA. There is also a lawsuit that FHFA is a party to based on the Equal Pay Act. It is pending in federal court in D.C. 

Since these allegations were raised, the Agency and the Director have had separate legal counsel on this matter. The Director has not made any decisions on behalf of the Agency with respect to any of these legal reviews. Further, the Director has had no involvement of any kind in any employment decisions relating to the complainant since these allegations were raised.

Chairman Hensarling was clearly disappointed with the whole process and made some pointed remarks about the state of the FHFA.

At the beginning of the hearing, Hensarling read from a newspaper the headline, “Housing finance system roiled by maze of investigations,” and the article's first two paragraphs detailing the embroiled state of the U.S. Housing Finance Administration.

Here are his remarks:

Recent headlines from [a] newspaper, “Housing finance system roiled by maze of investigations.” Let me read the first two paragraphs:

“The U.S. housing finance administration has been rocked by a series of investigations that have raised fresh doubts about the federal government's management of the vast system that supports most of the nation's mortgages.

"The country's top housing regulator is under investigation for alleged sexual harassment. The watchdog looking into his behavior is herself under a probe — partly over claims that her office is too cozy with his. And the outgoing CEO of the largest mortgage financier was faulted in a report for failing to disclose potential conflicts stemming from a romantic relationship.”

These headlines are not fake news. And so, what we know is, after 10 years, housing finance is in dire need of reform, and FHFA is in dire need of oversight.

Grimes' allegations against Watt were first made public in late July when Politico reported that Watt is under investigation for alleged sexual misconduct. Politico reported that the conversations included a 2016 meeting where Watt steered the discussion to his feelings for the woman, according to documents and partial transcripts of tapes obtained by the news agency.

“Well, you probably want to know what I wanted to talk to you about,” Watt is allegedly heard saying on the tape. “I mentioned to you there is an attraction here that I think needs to be explored. In my experience there are four types of attraction: emotional, spiritual, sexual or of friendship. So, the exercise here is to find out which one exists here.”

In another transcript reported initially by Politico, dated June 17, 2016, Watt appears to ask the employee about her ankle tattoo and suggested kissing it.

According to the transcript, the employee asked, “Is that what we’re here to talk about? Because I already told you I don’t want to have conversations like that with you,” with Watt replying: “No, no,” and immediately redirecting the conversation to “resolv[ing] the pay situation you’ve been bringing up.”

Since the news broke, Grimes has filed a lawsuit against the FHFA and is seeking $1 million in damages. In the lawsuit, Simone Grimes v. Federal Housing Finance Agency, Grimes claims the agency paid her less than the man who held her position before her because she refused sexual advances from Watt.

Grimes’ lawsuit claims that “Director Watt directed her back to their prior conversations, asserting that, ‘You didn't promise me anything, and I didn't promise you anything.’ Director Watt was referencing the fact that she did not promise him sexual favors, so he did not promise her a pay increase.”

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