Thursday, September 11, 2008

Fannie Mae, Freddie Mac, Social Purpose and Bribes (FNM; FRE)

Just some random links on just how corrupt and incestuous the relationship between the GSE's and the politicians was (is).
From the Columbia Journalism Review:
Mae We Correct the Record?

The Fannie/Freddie Fiasco is bad enough without news outlets letting politicians mangle their history.

In reporting the two parties’ positions on the GSE’s future, the Journal, for instance, lets a misstatement stand:

...“There is no validity in taking a for-profit private company and forcing a nonprofit social mission on it,” says Texas Rep. Jeb Hensarling.
Congressman Doofus has it exactly backwards. Leaving aside the relevance of Section Eight and other HUD programs to the mortgage giants that hold up the global bond market, Fannie Mae started as a government program with a clear social mission— lowering housing costs....MORE
From Harvard's own, Professor Greg Mankiw:

Show Me the Money

Top Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008

1. Dodd, Christopher J, D-CT
2. Kerry, John, D-MA
3. Obama, Barack, D-IL
4. Clinton, Hillary, D-NY


N.B.: Senator Dodd is Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs.

From Bloomberg:

Fannie, Freddie Takeover Ends Lobbying Effort Bigger Than GE's

The government's takeover of Fannie Mae and Freddie Mac stops one of Washington's most powerful lobbying juggernauts in its tracks after the mortgage giants had spent tens of millions of dollars thwarting efforts to increase government oversight.

``There's no doubt that the legislation was delayed for many years because of the strength of their lobbying power,'' said James Lockhart, director of the Federal Housing Finance Agency, after issuing an order halting all of their political and lobbying activities. The companies employ 20 in-house lobbyists and 48 outside firms, U.S. House records show.

``Effectively they report to me and government agencies can't have lobbyists,'' he added in an interview yesterday. ``So they notified all of their outside lobbyists that they are no longer allowed to do any lobbying.''

The government's decision to end the mortgage companies' political and lobbying activities is reminiscent of the 1998 agreement between state attorneys general and tobacco companies. As part of the deal, the industry shut down its trade group, the Tobacco Institute, which issued studies and fought efforts to restrict smoking.

Fannie Mae and Freddie Mac spent $7.4 million on lobbying in the first six months this year -- $2.9 million by Fannie Mae and $4.5 million by Freddie Mac. Their $174 million in combined lobbying expenses since 1998 put the two companies just behind the U.S. Chamber of Commerce and the American Medical Association and ahead of General Electric Co., according to the Center for Responsive Politics, a nonpartisan Washington-based group that tracks money in politics....MORE

From Politico:

...The gaping hole left by the sudden departure of Fannie Mae and Freddie Mac from the lobbying game has old friends and foes alike sifting the fallout for clues to the new order.

“Whenever you have an ally that ceases to exist so abruptly, there’s something missing. There’s a vacuum,” said Ryan Donovan, a chief lobbyist for the Credit Union National Association....

From The Christian Science Monitor:

SOURCE: Center for Responsive Politics/Rich Clabaugh–STAFF Click to Enlarge
Mortgage giants Fannie Mae and Freddie Mac didn't just dominate the nation's $12 trillion home loan market, they were also masters of influence in Washington.

As government-sponsored enterprises, Fannie and Freddie owned or guaranteed some $5 trillion in residential mortgages – a cushion for creating two of the most extensive lobbying operations in Washington.

At its peak – last week, just before the Treasury Department announced a government takeover – the operations ranged from campaign contributions and outright lobbying to a grass-roots charitable giving operation that covered nearly every congressional district.

"They were the most powerful companies in the country, and literally controlled the Congress," Peter Wallison, a senior fellow at the American Enterprise Institute. "Congress would not do anything they did not want Congress to do – and that came through some very sophisticated political activities and public relations that made it very difficult to challenge them."

Since 1990, Freddie Mac has contributed more than $9.7 million to federal campaigns. Fannie Mae's political action committee chalked up more than $2.9 million since 2004, according to the Center for Responsive Politics. Together, they spent some $7.4 million in lobbying in the first six months of 2008 alone.

That's just the beginning. What's most remarkable about the influence operation is its sheer vastness.

Over the last decade, Fannie and Freddie together hired nearly every lobby shop in Washington – so many, in fact, that opponents complained that they had trouble finding someone to represent their interests.

In addition, Fannie and Freddie supported a vast network of charities, often specifically linked to members of Congress.

Some of the biggest movers and shakers in Washington graced their mastheads. James Johnson, chairman and CEO of Fannie Mae from 1991 to 1998, is a Democratic insider who chaired Walter Mondale's presidential campaign. His successor, Franklin Raines, was former director of the US Office of Management and Budget during the Clinton administration...MORE

From the International Herald Tribune:

Obama and McCain both have ties to troubled mortgage giants

Senators Barack Obama and John McCain each cite the bailout of Fannie Mae and Freddie Mac as evidence of the corrosive coziness of lobbyists and politicians that they promise to end. But each man and his party also have ties to the fallen giants that will complicate the next president's job of reshaping the mortgage finance companies that have been essential to the economy.

McCain, the Republican nominee, has numerous close relationships with and enjoys contributions from current and former company lobbyists.

Obama, his Democratic rival, is second among all members of Congress in donations from the companies' employees and political-action committees.

Beyond the anti-lobbyist message, Obama also indicts the Bush administration and the Republicans who controlled Congress for a dozen years until 2007, including McCain. He blames them for hands-off regulation that freed the companies to go deep into debt to buy the mortgages that crushed them as the housing crisis persisted.

Yet his fellow Democrats in Congress have been well known as enablers of the two companies for years, protecting the firms' dueling responsibilities to support affordable housing as well as to maximize shareholder profits....MORE

Pretty sick.