If you want your daily rage inducing news piece, this Associated Press investigation into Freddie Mac and Fannie Mae should do the trick. Below are some snippets, but you should really read the whole thing: (more…)

1 Comment

Just like on Elm Street, Freddie killed bills in Congress. The Ted Stevens trial is set to wrap up today amidst cross examination of the Alaska senator. Lawmakers pressure AIG to stop lobbying. A look inside lawmaker insider trading. All of that in today’s news:

In 2005, when Republicans still ruled Washington, Freddie Mac deployed a stealth lobbying effort targeting 17 Republican senators in an effort to beat back a reform effort pushed by Sen. Chuck Hagel. The lobbying firm employed, DCI, never filed a lobbying disclosure form as they avoided direct contacts with lawmakers and staff. Instead, the firm, whose lobbying effort Freddie Mac chief Hollis McLoughlin wanted to stay on the down-low, deployed high-profile constituents - businessmen, trade associations, etc… - to push back against the regulation effort to their senators. Freddie Mac was very happy with DCI’s efforts as they kept 9 of the 17 targeted senators from signing a letter to then-Majority Leader Bill Frist asking that the bill be brought to the floor for a vote.

Sens. Dianne Feinstein and Mel Martinez responded to the appalling revelation that AIG is using taxpayer money to lobby against already enacted regulations by calling for the partially privatized insurer to stop its lobbying activities. AIG exists solely because of a $120 billion loan from the federal government, making the United States taxpayer the majority shareholder of the insurance giant.

Final fireworks are expected to fly as the fast moving ethics trial of Sen. Ted Stevens comes to a close today. Stevens is expected to face further cross examination today. The cross has already brought out the Incredible Hulk in Sen. Stevens as he showed his temper in court the other day. The defense attorneys are likely hoping that Stevens can better control himself. They don’t want to see him when he’s mad.

Open Secrets points to ProCon.org and their look into the issue of insider stock trading in Congress. Earlier this year, Rep. Brian Baird proposed the STOCK Act, which would make it illegal for lawmakers, staff, and executive branch officials to trade stocks with the benefit of nonpublic information obtained through the status of their official position. Another bill proposed by Rep. Baird would require “political intelligence” firms to publicly disclose their activities in the same way lobbyists do. In case you were wondering whether there is an actual insider trading positive effect on Congress’ stock sheets, check out this graph:

0 Comments

Budgeting political risk helped Fannie Mae, Freddie Mac, and financial services companies avoid the kind of scrutiny they needed from Congress for the past several years. Millions of dollars in private travel, campaign contributions, and lobbyists-galore created a border wall that no regulation or reform could climb over. Florida Rep. Tim Mahoney’s hole gets deeper as a 2nd affair is revealed, the FBI opens and investigation, and the Democrats ditch him. There’s more in this round-up of today’s news:

Dave Jamieson at The New Republic looks into the lavish treatment members and staffers of the House Financial Services Committee received from Fannie Mae, Freddie Mac, and financial services companies in the years preceeding the collapse of the industry. Former chairman Mike Oxley, who now works for NASDAQ and as a lobbyist, approved a half-million dollars worth of privately paid travel, much of it offered by financial services companies. Fannie Mae and Freddie Mac had approximately one lobbyist for each member of the 70 person committee. Campaign contributions were spread around like butter on cornbread. Of course, all of this largesse eventually lured numerous staffers and committee members into the private sector and Jamieson names names:

Former Oxley adviser Carter McDowell moved on to the American Bankers Association; Karen Lynch Calton, one-time counsel to the committee, has lobbied for the Consumer Bankers Association; Greg Zerzan, an aide to Oxley, eventually went to the International Swaps and Derivatives Association; Linda Dallas Rich, a committee adviser, headed to the New York Stock Exchange; longtime Oxley aide Clinton Jones hopped to Fannie for a spell, before returning to Congress to serve Bachus on the finance committee; and even though Baker had been a perennial foe to the GSEs, the congressman’s own former chief of staff, Duane Duncan, became a star on Fannie’s lobbying team.

Rep. Tim Mahoney is in a load more trouble after the Associated Press revealed another affair and ABC News, the team that broke this story, reported that the FBI is investigating the allegations of hush money paid to the first reported mistress. It is alleged that Mahoney hired Patricia Allen, the first reported mistress, to both his campaign and congressional staffs. After things went sour (she discovered he was having another affair) Mahoney fired her and allegedly paid her $121,000 to keep her from filing a wrongful termination lawsuit. Speaker Nancy Pelosi called for an ethics committee investigation (although those haven’t really led to anything since, I don’t know, the 1990s) and House Democrats effectively abandoned the freshman Florida congressman to fend for himself in a difficult district.

The defense team in Sen. Ted Stevens’ trial for filing false statements on his personal financial disclosure forms is attempting to show that the home renovations at the center of the charges were done for VECO’s Bill Allen and not for Stevens. Stevens’ daughter, Susan Stevens Covich, testified that when she appeared at her father’s Girdwood, Alaska home to spend time while visiting Allen was present in numerous other people, often taking up all five available bedrooms leaving her to sleep on the couch. Covich said she stopped staying there after Allen’s constant presence became “creepy“. Previously, defense attorneys have shown that Stevens spends most of his time living in Washington, DC and not at the home in Girdwood. The judge presiding over the case stated that the case will likely be handed to the jury next week.

0 Comments

Two years ago, I was named Time’s person of the year and now I own an insurance company, two mortgage brokers, and I’ll soon own nearly $1 trillion worth of stock. I am so proud of me.

Luckily for me, financial services lobbyists are summoning the economic advisers of both presidential campaigns to help them draft policy positions on how to deal with my newly acquired assets and any future purchases.

It is the “dirty little secret in town,” said one financial-services lobbyist — that after lambasting lobbyists on the stump, the candidates need their counsel on how to respond to a crisis with origins too complicated for most industry outsiders to understand.

…

This week, two of the biggest financial groups in Washington, the Financial Services Roundtable and the Mortgage Bankers Association, have drawn in members from across the country to grill economic advisers from both campaigns, develop policy positions and urge prudence as both parties struggle to craft a regulatory stance on the deepening crisis.

Does this mean that Phil Gramm will be sitting across from himself?

The Legal Times blog reports that the Justice Department will release a number of documents and audio recordings related to the trial of Sen. Ted Stevens. One of those audio recordings of Stevens reveals him to be incredibly cheap. “Ted gets hysterical when he has to spend his own money,” says Alaska restaurateur Robert Persons to VECO chief Bill Allen. Stevens won one battle, to obtain Allen’s medical records. Allen is the government’s primary witness and has a history of mental health problems related to a motorcycle accident.

The Ethics Committee is pushing ahead with an inquiry into Rep. Charles Rangel’s financial disclosure snafus. Consensus has yet to take place as Ethics interim Chairman Gene Green and Ranking Member Doc Hastings released dueling letters on the form of the investigative subcommittee.

I think that someone already did this. He’s totally never on TV, so I can’t remember his name.

As I’ve already written about here, the Fannie Mae and Freddie Mac PACs are now shuttered, ending an era of boundless campaign contributions used to keep lawmakers out of their business. Thanks to those campaign contributions and the subsequent lack of oversight, I now own these two mortgage giants.

Which leads directly to a Quote of the Day, from Eric Brown’s Political Activity Law Blog:

We’ll have “public funding” before we know it, given all of these government bailouts of companies with PACs… AIG, Freddie Mac, Fannie Mae…

5 Comments

The complete meltdown in subprime mortgages has caused a total makeover of the investment industry. The effect of the makeover on Wall Street will trickle down to Washington, with diminished campaign contributions, lobbyists out of work, and new bills and regulations to wrangle over.

First came the government takeover of Fannie Mae and Freddie Mac. The home loan giants were two of the biggest names in the Washington influence game over the past decade. The two organizations spent a combined $200 million on lobbying over the last ten years and, since 1990, have contributed $19.5 million to political campaigns. It is no wonder that Fannie and Freddie avoided the crucial scrutiny that they needed over the last ten years. And now, Fannie and Freddie’s lobbying shops are shuttered, their political contributions are cut off, and they will no longer throw extravagant fetes for lawmakers and cabinet secretaries.

Yesterday’s collapse of Lehman Brothers, the Bank of America takeover of Merrill Lynch, and today’s AIG firesale, will cause similar aftershocks in Washington. Since 1989, these companies have contributed millions to federal candidates for election:

Merrill Lynch - $14.7 million

Lehman Brothers - $9.2 million

AIG - $9.7 million

The fall-off in campaign contributions from these companies will likely spread to the entire securities and investment industry. The Wall Street Journal points out that during the 2008 election cycle securities and investment contributions are the 2nd largest source of money for Democratic candidates and the 3rd largest source for Republicans. Already those contributions have slowed over the summer months preceding this crisis.

Lobbying spending is likely to shift, but probably not drop-off. Since 1998, Merrill Lynch spent $39.3 million on lobbying in Washington. That account will likely be wiped out for now, as Bank of America takes over for them. Lehman Brothers, which was denied help during their collapse, is a smaller player in Washington with $6.3 million in lobbying expenses since 1998. The events of the past few days have completely wiped out the lobbying enterprises of two companies that spent over $45 million over the decade.

The securities and investment industry is one of the biggest spenders on lobbying Washington. Since 1998, this industry has pumped $551 million into influencing decision makers in Washington. Over the past two years, 2007-2008, the industry spent over $132 million on lobbying.

With the raft of new legislation and regulations about to break through like storm surge over New Orleans levees, the industry, despite its massive financial problems, can’t afford to cut their lobbying expenses. Some lobbyists may wind up out of a job, but there will always be new ones to take their place.

(All totals calculated from data available at OpenSecrets.org.)

0 Comments

Yesterday, I was thinking about Sen. Jim DeMint’s bill to ban Fannie Mae and Freddie Mac from lobbying Congress and I thought that the legislative fix probably would not be necessary after the government takeover. Looks like that was correct:

With just three sentences, Federal Housing Finance Agency Director James B. Lockhart on Sunday sent an unambiguous signal that one of Washington’s longest-running parties is over — and that some hangovers are on the way.

In the wake of the government takeover of the two beleaguered mortgage giants, Fannie Mae and Freddie Mac, compensation for their newly recruited CEOs “will be significantly lower than the outgoing CEOs,” said Lockhart.

“All political activities — including all lobbying — will be halted immediately. We will review the charitable activities,” he added.

As the Politico explains, this will be a complete shock to the political culture in Washington, where Fannie Mae and Freddie Mac have been two of largest campaign contributors through their PACs and are prolific spenders on lobbying.

• Since the 1990 election cycle, Fannie and Freddie employees and political action committees have given $19.5 million to federal candidates and committees. Freddie ranks among the top 100 industry donors of all time.

• Fannie had already given $1.3 million to candidates for the 2008 election cycle, and Freddie had given nearly $600,000.

• Fannie and Freddie have spent more than $180 million lobbying Capitol Hill in the past 10 years.

• In the first six months of this year, as the housing market collapsed and scrutiny heightened on Capitol Hill and from the Bush administration, Fannie and Freddie spent roughly $8 million combined to advocate for their interests.

• Between 1980 and 2007, the Fannie Mae Foundation donated $608,000 to the Congressional Black Caucus Foundation and $285,000 to the Congressional Hispanic Caucus Institute.

For more on Fannie and Freddie’s giving over the years see this post by Open Secrets’ Lindsay Renick Mayer.

0 Comments

Mortgage giant Freddie Mac, a recent recipient of a federal bailout, will not throw a party during the Democratic nominatin convention in Denver. When I’m broke I can’t go to a party, let alone throw one for a bunch of lobbyists and politicos. So I understand.

Freddie Mac might be saving some money and face in this decision, but they’ve been happily doling out money to committees that provide oversight over the mortgage industry. Below is a chart of Freddie Mac’s PAC contributions to active members of the House. Financial Services Committee members are highlighted: (more…)

0 Comments