NYT Gets it Wrong, Part II: What the Ethics Rules Really Say and Why a Story Like This Gets Written

I spoke to the NY Times reporter several times on the substantive policy issues at play.  Eventually, however, her questions shifted to allegations of possible ethical and legal violations on my part.

Let me say emphatically and categorically — I took great care to adhere to all ethics rules and have never done anything unlawful.  Every step of the way, from the moment I was first contacted by MBA through today, I have worked closely with lawyers at HUD and continued to consult with counsel while at MBA to make sure every action I took did not even approach the ethical or legal line.  At every turn, I erred on the side of caution.

Here is the key point:  None of my MBA activities devoted to policy discussions or advocacy for or against particular policies are prohibited or restricted by federal law (technically-speaking, 18 USC §207, the statute covering post-employment restrictions on federal employees).

Activities prohibited under §207 are limited to “particular matter[s].”  The Office of Government Ethics has issued advisory opinions characterizing the law as applying to “particular matters involving specific parties” like contracts or lawsuits.  Federal Courts have concurred.

As my attorneys told the Times before the story was printed, “The law is clear that Mr. Stevens’ activities involving development of policy and even proposed legislation are not encompassed within the prohibited activities outlined in §207.”

Here are a few other excerpts from our letter to the Times:

“When Mr. Stevens determined to leave the Obama Administration in December 2010, he worked closely with the General Counsel and Designated Ethics Official of the Department of Housing & Urban Development to ensure compliance with federal law and Obama Administration voluntary policies related to post-employment activities.”


“Likewise, Mr. Stevens’ contact with the Federal Housing Finance Authority (“FHFA”) does not implicate §207 because FHFA is not a component either of HUD or FHA, where Mr. Stevens served.  Rather, it is an independent regulatory agency.  As such, §207 is not applicable to interactions between Mr. Stevens and FHFA.”


“In sum, there is absolutely no ethical lapse or breach on the part of Mr. Stevens – and any suggestion to the contrary is false and misleading – and should not appear in your story.”

So, it begs the question, where did this story come from?

Many speculate there is a well-financed campaign paid for by those with a financial interest in preserving the GSEs in their current state as corporate entities.  After the crisis, and with the GSEs in conservatorship, they invested heavily in GSE stock, and they want the GSEs out from under the conservator, so their stock can go up in value and they can realize a windfall for themselves and their investors.

They view MBA as thought leaders and a threat to their plan to recapitalize the GSEs and release them from conservatorship without first reforming them.  So they are trying to discredit our efforts.  It’s probably no coincidence that one of MBA’s most outspoken critics happened to have co-written a 2011 book on the GSEs culpability in the financial crisis with this same NYT writer.

There is also an element who stand to benefit from trying to drive a wedge between MBA and certain segments of its own membership. But it’s a fool’s errand and why the reporter did not have one MBA member on record.

In the end, a story like this takes focus away from the important issues around the future of housing finance and how to end the unsustainable conservatorship of Freddie Mac and Fannie Mae.  Instead, the article preys on the cynicism about Washington and the policymaking process that makes legislating and regulating on serious issues like this virtually impossible.