Fannie and Freddie were considered virtuous organizations and that gave them power. That power eventually attracted corruption like oil in the Middle East. I guess politicians can even exploit virtue.
Over the past decade, both Fannie and Freddie made the list of Washington’s top 20 lobbying spenders. They spent a combined $170 million to cultivate allies during that period, a bit less than the American Medical Association and a bit more than General Electric. At the same time, their executives have consistently led the mortgage-banking sector in campaign giving to members of Congress, contributing a combined $16.2 million since 1997.
To help keep themselves free from unwanted regulatory and congressional prying, the two mortgage giants have surrounded themselves with scores of well-connected allies. Fannie Mae’s 51-member lobbying stable, according to its most recent disclosure, includes former Reps. Tom Downey, D-N.Y., and Ray McGrath, R-N.Y.; Steve Elmendorf, a Democratic political strategist and former congressional aide; and Donald Fierce, a longtime GOP operative. Freddie Mac’s list of 91 lobbyists includes former Reps. Vin Weber, R-Minn., and Susan Molinari, R-N.Y.
At times, the push for influence has gone over the ethical line. In 2006 Freddie Mac paid a $3.8 million civil penalty to the Federal Election Commission to settle charges that it had used corporate resources to stage 85 fundraising dinners that raised $1.7 million for candidates for federal office. In internal documents, Freddie Mac described the events as an exercise in “political risk management.” The fine still stands as the largest in the FEC’s 33-year history.
This past April, former Fannie Mae chief Franklin Raines and two top executives agreed to a $31.4 million settlement with the government over their roles in a 2004 accounting scandal.