In 2002, President George W. Bush designated Korsmo to be Chairman of the Federal Housing Finance Board, an independent regulatory agency that regulates the 12 Federal Home Loan Banks, which help supply funds to lenders that finance loans for home mortgages. He was confirmed by the Senate on November 29, 2002. He replaced J. Timothy O'Neill, who has been serving as Chairman since June 18 and remained a director on the Board. Korsmo resigned from the Finance Board in 2004.
Investigation and conviction
The Banking Committee and the Inspector General were looking into the propriety of Korsmo's participation in a fundraising event for a congressional candidate. Korsmo was listed as the "Special Guest" on the invitation to the fundraiser, and the invitations were sent to the Presidents of the Federal Home Loan Banks that are regulated by the Finance Board. Following the fundraising event, Sen. Paul Sarbanes, the Chairman of the Senate Banking Committee, questioned Korsmo about his participation in the fundraising event whose invitations were sent to banking officials that he regulated. Sarbanes asked the Inspector general to investigate. The FBI also investigated. In a written response to Senator Sarbanes, Korsmo stated that he did not know how the congressional campaign obtained contact information for the banking officials. Later, Korsmo admitted that his letter to Chairman Sarbanes was false and that he knew before the fundraising event that his wife, who was involved in organizing the event, had provided Korsmo's detailed contact information to the banking officials to the campaign. Korsmo also admitted that he lied to Inspector General agents regarding his knowledge that his wife had provided the contact lists to the campaign. Korsmo entered his plea in Federal Court in Washington, D.C.., before Judge Henry H. Kennedy Jr. He pleaded guilty to one count of making false statements to the Senate Banking, Housing and Urban Affairs Committee, which oversees the Finance Board, and the Inspector General for the Finance Board. Korsmo was convicted of a felony in the United States District Court for the District of Columbia, in the case of United States of America v. John T. Korsmo, Case Number CR05-104-01, as follows: 18 USC 1001, False and Fictitious Statements, for which he received a sentence of unsupervised probation for a term of 18 months, an assessment of $400 and a fine of $5,000.
