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Freddie Mac Paid $200M to Republican Consulting Firm to Kill Regulatory Legislation

US Politics & Gov't  (tags: Freddie Mac, Fannie Mae, DCI, corruption, US Senate, Republicans )

- 3899 days ago -
Details of a secret campaign by Freddie Mac to defeat a bill that would have provided for more stringent regulatory standards and trimmed the size of their programs have been just been revealed. DCI targeted 17 Republican senators to defeat the bill.


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RC deWinter (418)
Sunday October 19, 2008, 4:03 pm
The bill was sponsored by Republican Senator Chuck Hagel of Nebraska, and the Banking, Housing and Urban Affairs Committee sent Hagel's bill to the Senate, then dominated by Republicans, in July of 2005. Shortly afterward, Freddie Mac began its secret payments to DCI. From the article:
"DCI never filed lobbying reports with Congress about what it was doing because the firm was relying on a long-recognized gap in the disclosure law."

Deceit and corruption are what rules our country. We have moral or ethical authority whatsoever.

RC deWinter (418)
Sunday October 19, 2008, 4:16 pm
Another snippet: "In the midst of DCI's yearlong effort, Hagel and 25 other Republican senators pleaded unsuccessfully with Senate Majority Leader Bill Frist, R-Tenn., to allow a vote." In other words, Frist never presented the bill to the Senate for a vote.

Amazingly enough, Democrats were opposed to the regulatory standards and proposed sell-off of some of Freddie's & Fannie's portfolios because they were afraid people would be cut out of the low-income housing market. They were WRONG on that call. Better that these two agencies were cut back and regulated then than to have them be the leaders in the fall of the entire housing market, now that just about everyone is locked out. Especially galling is knowing that Freddie & Fannie kept providing mortgages to people totally unqualified to buy anything, much less a house.

Joycey B (750)
Sunday October 19, 2008, 4:23 pm
Noted with anger and disgust. Thanks Cate.

Judith Jaehn (199)
Sunday October 19, 2008, 4:39 pm
I'm with you Joycey! Noted with much disgust! Thank you Cate!

Terrie Williams (798)
Sunday October 19, 2008, 4:54 pm
It never friggin ends does it?

Faith M (161)
Sunday October 19, 2008, 5:02 pm This is the remedy-fire the traitors!

Margi L (129)
Sunday October 19, 2008, 5:05 pm
This is why we can't let McCain win this election!!!

Pauline Houzard (108)
Sunday October 19, 2008, 5:29 pm
The more I hear the more disgusted I am, Thanks Cate

Carolyn T (234)
Sunday October 19, 2008, 5:43 pm
Noted. Another example of why the American voter nees to clean all of its houses...from their state houses to the two chambers of Congress, and all the way to the White House! I absolutely refuse to wave a white flag...not when I am seeing red ones all over the place! Thank you, Cate.

. (0)
Sunday October 19, 2008, 6:24 pm
This post illustrates where the real power is..anyone under any illusions ,is under them because they are terminally addicted to Fox news.The whole fish is rotten,and replacing the head would only make a minor positive difference,but that seems enough of a reason to vote Obama...seriously.
So long as people keep analysing,criticizing and trying to make things better,an Obama victory could make a difference..It'll still be crap,but less so.Like when Clinton was in power,he didnt get the gun control bill or Hilarys healthcare bill through,and he did slash welfare -though this was due to Republican efforts (remember only the rich can take from the state)but the economy was sounder,and there was a slight redistribion of wealth to the working poor.
If the extreme right Republican's keep power, as opposed to the centre right Democrats,then the US will go further down the road ,to becoming a quasi-fascist theocracy...

All of that hope and energy invested in Obama,mustn't just dissapate, if/when Fox grudgingly declares him President.That isn't what democracy is about,even if all our democracies are already rotten ,skewered and owned by the powerful,people can still make some difference .
Obama should though be held to account,by democrats (and Democrat supporters),progressives etc,with the same ferocity as they would a Republican.

Kathy W (299)
Sunday October 19, 2008, 6:25 pm
I went to page and nothing was there. Will try again later. Thanks Cate.

Bob F (10)
Sunday October 19, 2008, 6:39 pm
The page was blank when I went to. But thats about right. And it dont matter whos running the goverment, it would have happened anyway. So blame everyone, not just one party. We all lose anyway.

Tom Barnes (2)
Sunday October 19, 2008, 6:39 pm
On Nov. 4th you will hold the only weapon that can eliminate the infestation that has spread over Washington. The ballot is more powerful than anything.

Bettina L (2)
Sunday October 19, 2008, 6:40 pm
Same thing.....went to the page and nothing there.....I'll check back in the morning

Past Member (0)
Sunday October 19, 2008, 7:08 pm
I got more than you did then, Kathy. I got this:

10/19/2008 12:00:00 AM

But I did get to read about Colin Powell endorsing Obama. Made my day.

Estella Ameigh (22)
Sunday October 19, 2008, 7:14 pm
10/19/2008 12:00:00 AM, but nothing else to read.

Tim Redfern (581)
Sunday October 19, 2008, 7:16 pm
$200M to kill the bill, huh?
Now that they've been nationalised,
do they figure they got their money's worth?
Thanks, Cate.

Jim Phillips (3247)
Sunday October 19, 2008, 7:21 pm
Nothing there. Would not surprise me that verizon may have killed the story & link. Do I wonder why...

TY, Ombretta.


Marian E (152)
Sunday October 19, 2008, 7:27 pm
Here it is.

"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 DCI of Washington were Republican senators and a regulatory overhaul bill sponsored by Sen. Chuck Hagel, R-Neb. DCI's chief executive is Doug Goodyear, whom John McCain's campaign later hired to manage the GOP convention in September.

Freddie Mac's payments to DCI began shortly after the Senate Banking, Housing and Urban Affairs Committee sent Hagel's bill to the then GOP-run Senate on July 28, 2005. All GOP members of the committee supported it; all Democrats opposed it.

In the midst of DCI's yearlong effort, Hagel and 25 other Republican senators pleaded unsuccessfully with Senate Majority Leader Bill Frist, R-Tenn., 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 Hagel'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, R-Ariz., was not a target of the DCI campaign. He signed Hagel's letter and three weeks later signed on as a co-sponsor of the bill.

By the time McCain did so, however, DCI'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.

McCain'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 month's GOP convention.

Obama has received $120,349 in political donations from employees of Freddie Mac and Fannie Mae; McCain $21,550.

The Republican senators targeted by DCI began hearing from prominent constituents and financial contributors, all urging the defeat of Hagel'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 DCI'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 Sen. 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."

Nine of the 17 targeted Republican senators did not sign Hagel's letter: Sens. Mitch McConnell of Kentucky, Christopher "Kit" Bond and Jim Talent of Missouri, Conrad Burns of Montana, Mike DeWine of Ohio, Lamar Alexander of Tennessee, Olympia Snowe of Maine, Lincoln Chafee of Rhode Island and George Allen of Virginia. Aside from the nine, 20 other Republican senators did not sign Hagel's letter.

McConnell's office said members of leadership do not sign letters to the leader. McConnell was majority whip at the time.

Eight of the targeted senators did sign it: Sens. Rick Santorum of Pennsylvania, Mike Crapo of Idaho, Jim Bunning of Kentucky, Larry Craig of Idaho, John Ensign of Nevada, Lindsey Graham of South Carolina, George Voinovich of Ohio and David Vitter of Louisiana. Santorum, Crapo and Bunning were on the Senate Banking, Housing and Urban Affairs Committee and had voted in favor of sending the bill to the full Senate.

On Thursday, Freddie Mac acknowledged that the company "did retain DCI to provide public affairs support at the state and local level." On Friday, DCI issued a four-sentence statement saying it complied with all applicable federal and state laws and regulations in representing Freddie Mac. Neither Freddie Mac nor DCI would say how much Goodyear's consulting firm was paid.

Freddie Mac paid DCI $10,000 a month for each of the targeted states, so the more states, the more money for DCI, according to the three people familiar with the program. In addition, Freddie Mac paid DCI a group retainer of $40,000 a month plus $20,000 a month for each regional manager handling the project, the three people said.

Last month, the concerns of the 26 Republican senators who signed Hagel's bill became a reality when the government seized control of Freddie Mac and Fannie Mae amid their near financial collapse. Federal prosecutors are investigating accounting, disclosure and corporate governance issues at both companies, which own or guarantee more than $5 trillion in mortgages, roughly equivalent to half of the national debt.

Freddie Mac was so pleased with DCI's work that it retained the firm for other jobs, finally cutting DCI loose last month after the government takeover, according to the three people familiar with the situation.

Freddie Mac's problems began when Hagel's legislation won approval from the Senate committee.

Democrats did not like the harshest provision, which would have given a new regulator a mandate to shrink Freddie Mac and Fannie Mae by forcing them to sell off part of their portfolios. That approach, the Democrats feared, would cut into the ability of low- and moderate-income families to buy houses.

The political backdrop to the debate "was like bizarre-o-world," said the second of three people familiar with the program. "The Republicans were pro-regulation and the Democrats were against it; it was upside down."

Sen. Richard Shelby, the committee chairman at the time, underscored that in a statement Wednesday, saying that with Democrats already on their side, it was not surprising that Freddie Mac and Freddie Mae went after Republicans. "Unfortunately," said Shelby, R-Ala., "efforts then to derail reform were successful."

In a sign of bad things to come, Freddie Mac was already having serious problems in 2005. Auditors had exposed massive accounting issues, so improved regulation was one obvious remedy.

Once Freddie Mac's in-house lobbyists failed to keep Hagel's bill bottled up in the committee, McLoughlin responded by secretly hiring DCI.

DCI never filed lobbying reports with Congress about what it was doing because the firm was relying on a long-recognized gap in the disclosure law.

Federal lobbying law only requires reporting and registration when there are contacts with a legislator or staff.

"To have it stealthy, not to let people know who is behind this, in my opinion is unethical," said James Thurber, director of the Center for Congressional and Presidential Studies at American University who long has taught courses about lobbying.

Goodyear is a longtime political consultant from Arizona who resigned from the Republican convention job this year after Newsweek magazine revealed he had lobbied for the repressive military junta of Myanmar.

McLoughlin, Freddie Mac's senior vice president for external relations, was assistant treasury secretary from 1989 through 1992 in the administration of President Bush's father. McLoughlin served as chief of staff to Sen. Nicholas Brady, R-N.J., in 1982 and to Rep. Millicent Fenwick, R-N.J., from 1975-79.

Seven of the 17 targeted Republican senators were in the midst of re-election campaigns in 2006, and according to one of the three people familiar with the program, Freddie Mac and DCI hoped those facing tough races would tell their Republican colleagues back in Washington that "we've got enough trouble; you're making it worse with Hagel's bill."

Five of the seven DCI targets who ran for re-election in 2006 lost, and Senate control switched to the Democrats.

A Freddie Mac e-mail on May 4, 2006 _ the day before Hagel's letter _ details the behind-the-scenes effort that Freddie Mac and DCI generated to hold down the number of Republicans signing Hagel's letter urging a full Senate vote. It said:

"What I'm asking is that DCI get a few of their key well-connected constituents from each state to call in to the DC office of their Republican senators and speak to the (legislative director) or (chief of staff) and urge them not to sign the letter. The following could be used as a short script."

The proposed script read: "We can all agree that Fannie's and Freddie's regulator should be strengthened but unfortunately, S.190 goes too far and could potentially have damaging effects on Georgia's _ example _ home buyers."

According to the third of the three people familiar with the program, "DCI was asked to help keep senators from signing; it was a big part of their effort that year and it was viewed as a success since many DCI targets did not sign the letter."

DCI's progress after the first four months of the campaign was spelled out in a 19-page document dated Dec. 12, 2005, and titled, "Freddie Mac Field Program State by State Summary Report."

A snippet of a senator-by-senator breakdown of the efforts says this about Maine's Snowe:

"Philip Harriman, former state senator, co-chair of Snowe's 2006 campaign, personal Snowe friend, major GOP donor and investment adviser, has written the senator a personal letter on this issue. Dick Morin, vice president Maine Association of Mortgage Brokers, has been in direct contact with Sen. Snowe's committee staff, has sent a letter to Snowe, and is pursuing a dozen(s) of letters from his members."

On Wednesday, Snowe's office issued a statement saying that she "literally gets hundreds of 'Dear Colleague' letters seeking support for their positions that she does not sign. Had this legislation come up for a vote in 2006, she certainly would have considered it on its merits _ as she does every vote. Just last July, she voted for the housing bill that established a new, stronger regulator."

Rosario Marin, a staunch McCain supporter who spoke at the GOP convention in September, was among the people DCI used in carrying out the campaign.

Marin, the U.S. treasurer during the first term of the Bush administration, went to Missouri and to Montana, Burns' state, where she spoke out against Hagel's bill.

At the time, Burns, who ended up losing his re-election bid, was caught up in a Washington influence peddling scandal centering on disgraced lobbyist Jack Abramoff.

Marin's visit triggered a local newspaper story in which the reporter contacted Burns' staff for comment. Burns' office told the newspaper the senator was not supportive of the latest version of Hagel's bill.

On Wednesday, Marin, now state consumer services secretary in California, issued a statement confirming that her trips to Missouri and Montana were in her capacity as a DCI consultant.

The December 2005 summary listing 17 Republican targets outlines the inroads DCI was making.

"On day one" of the effort, Sen. George Allen of Virginia had not addressed Hagel's bill and his legislative aide for housing was not assigned to it, the report said.

"Today," the report added, "the senator is aware of the issue and ... at the moment he is undecided." Allen's deputy chief of staff "has said that the senator will take into consideration before he decides that Freddie Mac is located in Virginia and is one of the largest Virginia employers."

"Grasstops/opinion leaders James Todd, president, the Peterson Companies wrote to both senators," the report added. "Milt Peterson, the founder and CEO of the company is one of Allen's major donors."

In the end, Allen, who lost his bid for re-election in 2006, did not sign Hagel's letter."

Thanks Cate and Stephen.

Evelyn Z (300)
Sunday October 19, 2008, 7:45 pm
Page STILL Blank


Thanks Stephen. Thanks Cate

Nina T (100)
Sunday October 19, 2008, 7:59 pm
Maybe you can get to the page from here...

"This is why we can't let McCain win this election!!!"

Why is that? Are you blaming McCain for this? McCain wasn't one of the targets , from what I read, and he also eventually added his name to Hagel's bill and spoke out supporting it. He gave a speech and warned the Senate of the pending crisis with Fannie and Freddie. Although not "targets" the Dems didn't want to put more regulations on Freddie and Fannie ...they didn't need "incentives" to vote against Hagel's bill. Why were only Republicans targeted? Because Freddie and Fannie were aware that none of the Dems supported Hagel's bill. Democrats spoke out and said there was no problem even when confronted with facts. Do you think agencies like this contribute huge sums of money to Senator's campaigns because they think they are nice guys? There is plenty of blame to go around in both Parties for this financial mess.

Thanks, Cate. I am thoroughly disgusted with all of them.


Bettina L (2)
Sunday October 19, 2008, 8:11 pm
Thanks Nina, your link worked

Evelyn Z (300)
Sunday October 19, 2008, 8:47 pm
Thanks Marian E. for saving & posting it here

Carol L (190)
Sunday October 19, 2008, 8:58 pm
There is indeed plenty of blame to go around, but nobody can blame McCain. McCain was not only for the bill he signed Hagel's letter and co-sponsored the legislation, unlike the democrats who were against it.

Deborah Hooper (59)
Sunday October 19, 2008, 9:08 pm
One more time!

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness."

In case you missed it - "deriving their just powers from the consent of the governed"

We really must stop consenting.

Al Baars (27)
Sunday October 19, 2008, 9:43 pm
--""This is why we can't let McCain win this election!!!"

Why is that? Are you blaming McCain for this? McCain wasn't one of the targets, from what I read, and he also eventually added his name to Hagel's bill and spoke out supporting it."

McCain may or may not have been involved in this particular scandal, but he has so many more in his to do list that it hardly matters.

"Why were only Republicans targeted? Because Freddie and Fannie were aware that none of the Dems supported Hagel's bill."--

Republicans were targeted, because at the time they controlled Congress. It was republicans who brought us the first great depression; It was republicans who brought us this one. Wanting a small government is one thing, but forcing it down our throats by bankrupting the planet is another. This is why we can't let McCain win this election!!!

--"There is indeed plenty of blame to go around, but nobody can blame McCain. McCain was not only for the bill he signed Hagel's letter and co-sponsored the legislation, unlike the democrats who were against it."--

It hardly makes a difference if democrats were against it, they did not have the votes to reject the bill, this was done by republicans and democrats at a time when it seemed the economy could support the risk.

Hind sight is 20/20, but it wasn't just this bill that sank us. It was the result of bad decisions foisted on us by a conservative democratic president under fire to pass bad legislation created by a republican controlled congress. The failure of our Fourth Estate, and a stolen election in favor of the worst president in US history. A president who brought us 9/11, tax cuts for the rich in a time of two fabricated wars, the growth of a larger paranoid unitary government, and a foreign debt larger than that created by all previous presidents COMBINED. That man is a republican, and our world will not survive another one at the helm!!!

Denice G (45)
Sunday October 19, 2008, 10:06 pm
Thanks Cate. The whole thing is disgusting.

Hans L (958)
Monday October 20, 2008, 12:22 am
Thanks Cate! Disgusting is not the right word this is simply awesome ....

the worst president in US history but he will be here until the after party......

How much more do you need before you realy unite as people and use your people power to impeach this man?

Monday October 20, 2008, 12:32 am

Past Member (0)
Monday October 20, 2008, 1:57 am
How do you clean house without the people who will be able and willing to kill the vermin!

Is there any pest control for this scum? I think that you will have to release all the innocent people from the prisons and put the right people behind bars!

This reminds me of some kind of western where the whole town has been taking over by criminals and the sherrif is also on the pay role...finally somebody has to come who dares to stand up and shoot the gangsters.....people will help with this revolution but you need at least one person who is willing to start the revolution ....

Revolution for GOOD!

Dolores H (2)
Monday October 20, 2008, 2:15 am
Noted with great anger!

Gail L (30)
Monday October 20, 2008, 3:37 am
What is this country coming to.

Past Member (0)
Monday October 20, 2008, 11:10 am
I'm not surprised to be very honest with you.

Why do we continue to be amazed and mystified by news like this. The government does not have our best interests in mind. The government will sacrifice anyone and anything as an "acceptable loss" if the need is great.

The people still have the power through numbers.

Past Member (0)
Monday October 20, 2008, 11:12 am

You cannot get rid of the vermin and the pests in a house that is completely corrupted. It's like trying to make endless repairs on a machine that cannot do the job it was designed to do. No amount of repairs, upgrade, security fixes and or patches WILL FIX ANYTHING THAT IS JUST BROKEN AND INEFFICIENT!!

Past Member (0)
Monday October 20, 2008, 11:17 am
The same things will continue to happen regardless of which pawn is selected. Why? Because the power does not lie with the president or the congress. Any elected official that doesn't understand this is immediately discredited, removed or assassinated. This what happened to JFK & RFK; they desired to change the system for the greater good and were murdered in the process.

Past Member (0)
Monday October 20, 2008, 1:06 pm
Harry Potter for President!

Jeff M (8)
Monday October 20, 2008, 2:07 pm
I can not in good conscience vote for either of the newest criminals running for office. People say vote is our only weapon. I say watch hacking democracy It's an HBO documentary on voter fraud. Very disturbing!

Nevaeh M (75)
Monday October 20, 2008, 8:52 pm
Every tomorrow has two handles. We can take hold of it by the handle of anxiety, or by the handle of faith.Thrift was never more necessary in the world's history than it is today.
Today, there are three kinds of people: the have's, the have-not's, and the have-not-paid-for-what-they-have's. thanks noted

Deborah Hooper (59)
Monday October 20, 2008, 9:50 pm
There are also the happy-and-satisfied-with-what-we-have's.

Frugal might be an 'F' word, but it's a good one. We really can live with less and be completely happy as long as our needs are met. My material needs are few.

Tsandi Crew (95)
Tuesday October 21, 2008, 7:05 am
I believe this and much worse is about to come out around the end of the week or the beginning of next week, the 27th and 28th.

Gus N (0)
Tuesday October 21, 2008, 10:35 am
The article title says 200 Million, but the article in the news is 2 million. It's all over the news at this point, so just google search it. is one link of many.
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