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How Freddie Mac Bribed House Committee

From a two year old article from the Associated Press:

Freddie Mac pays record $3.8 million fine

Settles allegations it made illegal contributions between 2000 and 2003

April. 18, 2006

WASHINGTON – The home loan giant Freddie Mac has agreed to pay a record $3.8 million fine to settle allegations it made illegal campaign contributions.

The fine announced Tuesday is by far the biggest ever levied by the Federal Election Commission. Because the Federal Home Loan Mortgage Corporation, widely known as Freddie Mac, agreed to pay the fine and stop breaking the law, the FEC said it would not take further action against corporate officials.

“We’re hoping this will catch people’s attention,” Commissioner Ellen Weintraub said, noting that campaign watchdogs have often called the FEC a do-nothing agency. “You don’t want to be the person who beats this fine.”

Freddie Mac was accused of illegally using corporate resources between 2000 and 2003 for 85 fundraisers that collected about $1.7 million for federal candidates. Much of the fundraising benefited members of the House Financial Services Committee, a panel whose decisions can affect Freddie Mac.

The fundraisers were organized by then-Freddie Mac lobbyists Robert Mitchell Delk and Clark Camper, who described them to the corporation’s board of directors as “political risk management,” the FEC said.

The lobbyists told Freddie Mac officials the fundraising effort was needed to help the corporation achieve its lobbying goals. Delk wrote in his 2001 performance appraisal that Freddie Mac had held more than 40 fundraisers for House Financial Services Chairman Michael Oxley, R-Ohio.

The FEC also found Freddie Mac officials used staff and resources to raise money from company employees to give to candidates, and that in 2002 the corporation itself gave $150,000 to the Republican Governors Association. The RGA ultimately returned the money.

U.S. law bans federally chartered corporations such as Freddie Mac from contributing to campaigns, and prohibits companies from using corporate resources and employees to help raise money for congressional and presidential candidates.

The fine is the commission’s largest since the FEC was created after Watergate. The previous record was held by Audiovox, which in 2003 was fined $849,000 in a corporate contribution case.

The FEC opened an investigation of Freddie Mac’s fundraising after the private group Public Citizen filed a complaint in 2003 accusing Delk, his wife Amanda, the Washington restaurant Galileo and the political consulting firm Epiphany Productions of making illegal political contributions.

Public Citizen’s complaint said the Delks made contributions higher than federal limits and the restaurant and Epiphany made illegal corporation donations by providing services for the fundraisers. The FEC decided against taking action against the Delks, Camper, Galileo or Epiphany.

Freddie Mac is one of the two largest U.S. buyers of home mortgages. Its campaign finance settlement comes after the corporation disclosed in June 2003 that it misstated earnings by $5 billion for 2000-2002, bringing calls for tougher government oversight.

Mind you this complaint was brought to the FEC by Public Citizen, which is the group founded by Ralph Nader.

Unsurprisingly, it is rabidly partisan, and targets Republicans exclusively.

As Discover The Networks notes:

Though Public Citizen claims to be officially “nonpartisan,” its political criticisms are aimed disproportionately at Republicans. In 2003, for instance, PC launched the website Whitehouseforsale.org, which accuses President Bush of accomplishing “his mission of destroying the presidential public financing system.” Public Citizen has also initiated BushSecrecy.org, which blames the Bush administration for post-9/11 civil liberties violations, lax regulation of allegedly carcinogenic products, cover-ups of auto-safety violations, and inadequate food-inspection standards.

All of which may help explain why the particular years 2001-2003 were chosen. Since the Republicans happened to hold sway during that time.

From a 2006 Public Citizen’s Congress Watch report (a pdf file):

For example, former Freddie Mac lobbyist Mitch Delk, who has contributed $41,950 to lawmakers since 1998, claimed that fundraisers he coordinated steered nearly $3 million to members of the House Financial Services Committee from 2000-2003.

That’s a million dollars a year. And we wonder why there was so little oversight.

More from the same Public Citizen Report:

Freddie Mac, and its cousin Fannie Mae, have been under fire from critics who contend they receive favorable treatment over competitors because their government backing amounts to a subsidy. In May 2005, Federal Reserve Board Chairman Alan Greenspan accused Freddie Mac and Fannie Mae of padding their profits with high-risk investments backed by government protection.

Freddie Mac has faced other travails in recent years, largely stemming from its use of campaign contributions and lobbying expenditures as levers to secure favorable treatment:

In early May 2006, Freddie Mac filed amended lobbying forms that added several lobbyists who had not been included in its original forms.

• The firm agreed in April 2006 to settle allegations that it made illegal campaign contributions by paying the FEC a fine of $3.8 million, dwarfing the commission’s previous record fine of $849,000. The investigation that led to the fine sprang from a 2003 complaint filed by Public Citizen that accused in-house Freddie Mac lobbyist Mitchell Delk, his wife Amanda, the Washington restaurant Galileo and a political consulting firm of making illegal political contributions.

• Also in April, Freddie Mac agreed to pay $410 million to settle class action lawsuits over accounting errors that led to a $5 billion earnings restatement.

In March 2006, Sens. Chuck Hagel (R-Neb.) and John Sununu (R-N.H.) introduced an amendment to lobbying reform legislation citing a Washington Post report that Freddie Mac and Fannie Mae combined to spend $23 million on lobbying in 2005 while Congress was considering legislation to tighten oversight of the companies. The amendment called on the Government Accountability Office (GAO) “to study the lobbying activities of GSEs to determine whether these activities further their statutory housing mission.”90 The amendment was ruled non-germane.

Note the last point.

Two Republicans wanted an investigation of Freddie Mac and Fannie Mae, but they were shut out.

And we wonder why there was so little oversight.

This article was posted by Steve on Tuesday, September 30th, 2008. Comments are currently closed.

2 Responses to “How Freddie Mac Bribed House Committee”

  1. EvaTheFrisbeeDog says:

    It’s really hard to imagine how a government agency can dole out campaign contributions and hire lobbyists.

    Could you imagine the defense department picking and choosing who they were going to back with political contributions? This is absurd! The Chinese Red Army does this sort of thing. How can this happen in America?

    I recall reading about a Wisconsin Congressman who was asking questions about Fannie a few years ago. They dispatched goons in suits and ties to sit in on his town hall meetings back home and pressured him relentlessly when he was in DC. Frank Raines called him personally to let him know that they had a close eye on him. Nothing short of Gestapo tactics.

  2. 1sttofight says:

    Yeah eva, it is like the post office advertising on TV.

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