Freddie Mac Arranged Stealth Campaign
The St. Petersburg Times - Feature - Freddie Mac Arranged Stealth Campaign
The Associated Press
WASHINGTON — Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.
In the cross hairs of the campaign carried out by lobbying firm DCI of Washington were Republican senators and a regulatory overhaul bill sponsored by Senator Chuck Hagel. DCIÂ’s chief executive is Doug Goodyear, whom John McCainÂ’s campaign later hired to manage the GOP convention in September.
Freddie MacÂ’s payments to DCI began shortly after the Senate Banking, Housing and Urban Affairs Committee sent HagelÂ’s bill to the then Republican-run Senate on July 28, 2005. All Republican members of the committee supported it; all Democrats opposed it.
In the midst of DCIÂ’s yearlong effort, Hagel and 25 other Republican senators pleaded unsuccessfully with then Senate Majority Leader Bill Frist to allow a vote.
“If effective regulatory reform legislation ... is not enacted this year, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole,” the senators wrote in a letter that proved prescient.
Unknown to the senators, DCI was undermining support for the bill in a campaign targeting 17 Republican senators in 13 states, according to documents obtained by The Associated Press. The states and the senators targeted changed over time, but always stayed on the Republican side.
In the end, there was not enough Republican support for HagelÂ’s bill to warrant bringing it up for a vote because Democrats also opposed it and the votes of some would be needed for passage. The measure died at the end of the 109th Congress.
McCain was not a target of the DCI campaign. He signed HagelÂ’s letter and three weeks later signed on as a co-sponsor of the bill.
By the time McCain did so, however, DCIÂ’s effort had gone on for nine months and was on its way toward killing the bill.
In recent days, McCain has said Freddie Mac and Fannie Mae were “one of the real catalysts, really the match that lit this fire” of the global credit crisis. McCain has accused Democratic presidential candidate Barack Obama of taking advice from former executives of Fannie Mae and Freddie Mac, and failing to see that the companies were heading for a meltdown.
McCainÂ’s campaign manager, Rick Davis, or his lobbying firm has taken more than $2 million from Fannie Mae and Freddie Mac dating to 2000. In December, Freddie Mac contributed $250,000 to last monthÂ’s GOP convention.
Obama has received $120,349 in political donations from employees of Freddie Mac and Fannie Mae; McCain $21,550.
TARGETED SENATORS
The Republican senators targeted by DCI began hearing from prominent constituents and financial contributors, all urging the defeat of HagelÂ’s bill because it might harm the housing boom. The effort generated newspaper articles and radio and TV appearances by participants who spoke out against the measure.
Inside Freddie Mac headquarters in 2005, the few dozen people who knew what DCI was doing referred to the initiative as “the stealth lobbying campaign,” according to three people familiar with the drive.
They spoke only on condition of anonymity, saying they fear retaliation if their names were disclosed.
Freddie Mac executive Hollis McLoughlin oversaw DCIÂ’s drive, according to the three people.
“Hollis’s goal was not to have any Freddie Mac fingerprints on this project and DCI became the hidden hand behind the effort,” one of the three people told the AP.
Before 2004, Fannie Mae and Freddie Mac were Democratic strongholds. After 2004, Republicans ran their political operations. McLoughlin, who joined Freddie Mac in 2004 as chief of staff, has given $32,250 to Republican candidates over the years, including $2,800 to McCain, and has given none to Democrats, according to the Center for Responsive Politics, a nonpartisan group that tracks money in politics.
On Friday night, Hagel’s chief of staff, Mike Buttry, said Hagel’s legislation “was the last best chance to bring greater oversight and tighter regulation to Freddie and Fannie, and they used every means they could to defeat Senator Hagel’s legislation every step of the way.”
“It is outrageous that a congressionally chartered government-sponsored enterprise would lobby against a member of Congress’s bill that would strengthen the regulation and oversight of that institution,” Buttry said in a statement. “America has paid an extremely high price for the reckless, and possibly criminal, actions of the leadership at Freddie and Fannie.”
and secondly, we don't trust em! 
