FHFA resolves dispute with employee over sexual harassment claim

WASHINGTON—The Federal Housing Finance Agency announced Friday that it reached a resolution with a woman who had accused former agency Director Mel Watt of sexual harassment.

Simone Grimes, a special adviser at the agency, alleged that Watt had abused his power and made inappropriate advances when she tried to discuss professional concerns related to a job promotion.

Grimes filed an equal pay lawsuit in the U.S. District Court for the District of Columbia last August, claiming she was paid less than the man who held her position before her. She alleged the pay discrepancy was related to her rejecting Watt's advances.

The case was later transferred to the U.S. Court of Federal Claims and then was dismissed, according to court records. The settlement terms between Grimes and the agency are not being disclosed, her attorney said.

Andrew Harrer/Bloomberg

An FHFA spokesperson said in a press release that Grimes “brought forward serious issues and the Agency is pleased to have resolved these matters.” The release included a statement from Grimes, who said, “I appreciate the Agency's attention and care to these issues."

Watt maintained that his comments were innocent, but the FHFA’s inspector general in February found “it more likely than not” that Watt “sought to coerce or induce [Grimes] to engage in some sort of relationship with him that went beyond their existing ‘friendship’ and/or mentorship.”

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

Watt sparked outrage in the House Financial Services Committee in a hearing last September when he stated he believed FHFA’s anti-harassment policy did not apply to him.

But under new FHFA Director Mark Calabria, who became the head of the agency earlier this year, there was a shift, said Grimes’ lawyer, Diane Seltzer Torre of the Seltzer Law Firm.

“What I really applaud is that the new administration did not continue with [Watt’s] attitude,” she said. “It took a very different approach, which was one of accountability and they did not want this litigation to continue. I appreciate that perspective."