House and Senate appropriators are urging the president to take "swift action" to replace top officials of the Office of Federal Housing Enterprise Oversight for failing to detect accounting irregularities at Freddie Mac and for the conduct of a current special investigation of Fannie Mae's accounting problems.The conference report, attached to a massive $388.4 billion omnibus appropriations bill, states that a HUD inspector general investigation raises "serious issues" about the conduct of OFHEO Director Armando Falcon Jr. and Deputy Director Stephen Blumenthal. The Department of Housing and Urban Development IG reported that Mr. Falcon acted within his authority in releasing damaging information about Fannie Mae. However, Sen. Christopher Bond, R-Mo., contends that the director abused the public trust by waging a campaign to "embarrass" Fannie. [See item below.] Sen. Bond requested the IG investigation, and he chairs the Senate VA-HUD appropriations subcommittee. "The conferees urge the President to take swift action in replacing the director and deputy director, both in consideration of the very poor decision making of these individuals over the past few years as well as the serious issues raised by the HUD IG's Report of Investigations," the conference report says. Director Falcon's five-year term ended a few weeks ago, but he is allowed to stay until a new director is appointed. The 2006 fiscal year appropriations bill passed by Congress provides $59.2 million in new funding for OFHEO, a 50% increase over last year's budget.

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