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New Details in Sexual-Harassment Allegations Against Mel Watt
Regulator of Fannie Mae, Freddie Mac
is under scrutiny ahead
of a September congressional hearing

California Rep. Maxine Waters,
the financial-services committee’s top Democrat, said Friday,

“I am concerned. I am awaiting the final Inspector General’s report
and Director Watt’s response.”

By Natalie Andrews ... Sept. 14, 2018 6:42 p.m. ET

WASHINGTON—An investigator’s report into top housing-finance official Mel Watt provides new details of a subordinate’s allegations of sexual harassment and includes purported documentation of their interactions.

The allegations, described in a summary of an investigative report viewed by The Wall Street Journal, portray the Federal Housing Finance Agency director as having pursued a romantic relationship with a woman over several years and denying her a raise and promotion after she rejected him. The contents, the results of a probe conducted by the U.S. Postal Service for the FHFA, were based on interviews with eight people, emails, transcripts and recordings, according to the report’s summary. The summary of the report doesn’t provide findings or conclusions, which are due to come after the postal service completes its probe.

The postal service led the investigation because the FHFA office that would normally handle such cases reports to Mr. Watt. There is a second government probe into the allegations, by the FHFA’s inspector general, which is considered independent from the agency’s leadership.

Simone Grimes accused Mr. Watt of denying her a raise and promotion after she rejected his advances.

Simone Grimes, a 44-year-old supervisory program management analyst, publicly alleged last month that Mr. Watt sexually harassed her when she sought better pay for taking on more tasks at work.

Mr. Watt, 73 years old, has said he didn’t break the law and has called leaks to the media about the allegations politically motivated.

“I am confident that the investigation currently in progress will confirm that I have not done anything contrary to law,” Mr. Watt said through a spokeswoman in August. His spokeswoman declined to comment on the allegations outlined in the document. The document says that Mr. Watt declined to be interviewed by the postal-service investigators on the advice of his attorney.

The allegations have fueled speculation that Mr. Watt, a former longtime Democratic congressman appointed to the FHFA post by President Obama, might leave before his term ends in January. President Trump will choose Mr. Watt’s successor, who must be confirmed by the Senate. A White House spokeswoman didn’t immediately respond to a request for comment.

The FHFA oversees Fannie Mae FNMA -1.30% and Freddie Mac , FMCC -0.66% which underwrite nearly half of all U.S. mortgages. Major business decisions by the companies must be approved by the FHFA.

Ms. Grimes also filed an equal-pay lawsuit in August in a Washington-based federal court seeking damages, back pay and relief from claims of retaliation for previously filed internal complaints about the alleged conduct.

The investigative summary from the postal-service inspectors, viewed by the Journal, outlines allegations that Mr. Watt, over a period of three years, repeatedly brought up his interest in Ms. Grimes when she attempted to talk to him about her job advancement.

The 73-page document summarizes an investigative report that is hundreds of pages long. It was prepared by Dan Pierce, an investigator hired by the postal service. In an interview, Mr. Pierce confirmed he was hired to investigate the matter but declined to comment further.

Mr. Watt first suggested to Ms. Grimes there was an attraction between the two of them in September 2015, according to allegations made by Ms. Grimes described in the document. The report describes an alleged incident in early 2016 at a lunch in the office cafeteria. Mr. Watt had expressed interest in seeing photos of Mr. Grimes’s safari trip to South Africa, asking four times to have lunch before she relented in February 2016.

After Ms. Grimes showed him pictures of scenery and animals, the director allegedly said: “I wouldn’t mind seeing pictures of you, particularly in a bikini.” Ms. Grimes says she told him that was inappropriate, the document says.

In April 2016, the allegations in the document say, Ms. Grimes and Mr. Watt went to dinner at his invitation and the director “told her he wanted to determine which type of attraction existed between them.” Ms. Grimes told him she was in a relationship and wanted to talk about work, the document says.

Ms. Grimes said in an interview that she meticulously tracked her interactions with Mr. Watt after his advances made her feel uncomfortable. She said she saved text messages and recordings of phone calls and meetings, some of which are included in the investigative summary.

House Republicans have said they plan to call Mr. Watt to appear before a panel of the House Financial Services Committee no later than Sept. 27. Mr. Watt’s spokeswoman said he planned to testify, but a date hadn’t been scheduled. The panel’s chairman, Rep. Jeb Hensarling (R., Texas), didn’t respond to a request for comment.

On Capitol Hill, top lawmakers have expressed concern about the allegations.

California Rep. Maxine Waters, the financial-services committee’s top Democrat, said Friday, “I am concerned. I am awaiting the final Inspector General’s report and Director Watt’s response.”

—Ryan Tracy contributed to this article.