The Secret Affairs of
Fannie Mae, Sallie Mae
& Freddie Mac
Sightings from The Catbird Seat
~ o ~
April 22, 2009
David Kellermann, Freddie Mac CFO, Said To Have Committed Suicide
UPDATE: 11:55 PM: The Washington Post reports more new information about Kellerman's apparent suicide, including the heartbreaking detail that his wife discovered him hanging from a piece of exercise equipment in the basement.
In addition, he was not immune to some of the recent controversies at Freddie Mac:
He and a group of company attorneys tussled with its regulator in early March as the firm prepared to file its quarterly earnings report with the Securities and Exchange Commission. The group insisted that Freddie Mac inform shareholders of the cost to the company of helping carry out the Obama administration's housing recovery plan. The regulator urged the company not to do so, according to several sources familiar with the matter. An FHFA official contested that account, saying the regulator did not oppose disclosure but how the information was portrayed in the filing.
UPDATE 11:30 PM: More details have emerged about the last few months of David Kellerman's life. According to the New York Times, he was alarmed by the public outcry over bonuses, he arranged security guards to watch his home.
Then early this month, Mr. Kellermann and other executives at Freddie Mac and Fannie Mae became the focus of intense scrutiny when lawmakers learned they would receive bonuses totaling $210 million. Mr. Kellermann was set to receive $850,000 over 16 months. Reporters and camera crews showed up at his home in Vienna, an affluent Virginia suburb of Washington. Fearing that someone might attack his house, his wife or their 5-year-old daughter, he asked the company for a security detail.
According to colleagues, the usually jovial Kellerman had appeared "stressed and overwhelmed by the job." The Wall Street Journal reports:
"He worked himself into a frazzle," a former co-worker said. Colleagues said Mr. Kellermann was involved in dealing with investigations into Freddie's accounting by the Justice Department and the Securities and Exchange Commission, but that there was no indication he was a target or that the inquiries were causing him anguish.
UPDATE 12:35: SEC, Justice Department investigating accounting practices at the agency:
The Wall Street Journal is reporting that the SEC and the Justice Department have been questioning Freddie Mac "officials" on possible accounting violations. The company made the disclosure in an SEC filing in March:
Freddie disclosed in the recent SEC filing that in September it received a federal grand jury subpoena from the U.S. Attorney's Office for the Southern District of New York seeking documents related to accounting, disclosure and corporate-governance matters. That subpoena was later withdrawn, Freddie has disclosed, and the investigation was taken over by the U.S. Attorney's Office for the Eastern District of Virginia.
"We know of no connection between this terrible personal tragedy and the ongoing regulatory inquiries discussed in our recent SEC filing," said David Palombi, Freddie's chief spokesman.
UPDATE 11:30 AM EST: Treasury Secretary Timothy Geithner issued a statement on acting Freddie Mac CFO David David Kellermann's death:
"On behalf of the Treasury we are deeply saddened by the news this morning of David Kellermann's death. Our deepest sympathies are with his family and his colleagues at Freddie Mac during this difficult time."...
Continued at...
http://www.huffingtonpost.com/2009/04/22/freddie-mac-suicide-offic_n_189911.html
Read More: David Kellermann, David Kellermann Freddie Mac, David Kellermann Suicide, Freddie Mac, Freddie Mac David Kellerman, Freddie Mac Suicide, Geithner Kellerman Statement, Reston-Virginia, Slideshow, Suicide, Suicide David Kellermann, Suicide Freddie Mac, Timothy Geithner David Kellerman, Business News
Additional References:
http://www.freddiemac.com/investors/faq.html:
11) Who is Freddie Mac's auditor?
PricewaterhouseCoopers LLP (PwC) has been our auditor since March 6, 2002.
April 17, 2009
Fannie Mae CEO to Run Bank Bailout
By JIM KUHNHENN, AP
WASHINGTON (April 17) - The White House turned to an experienced former investment banker Friday to run the federal government's $700 billion bank rescue effort, selecting the head of mortgage giant Fannie Mae as an assistant Treasury secretary.
Herbert Allison Jr., Fannie Mae's president and CEO, will replace Neel Kashkari, a holdover from the Bush administration.
Allison, who must be confirmed by the Senate, would bear the title of assistant Treasury secretary for financial stability and counselor to Treasury Secretary Timothy Geithner.
He would be in charge of the Troubled Asset Relief Program, the fund that has injected billions of dollars into banks in hopes of unclogging credit. He would inherit a program that has been sharply criticized in Congress and which banks have come to view warily because of the restrictions attached to receipt of its funds.
President Barack Obama's administration has been slowly filling Treasury positions, hindered by candidates who have either withdrawn from consideration or been caught up in the vetting process.
Fannie Mae, seized by federal regulators in September, is closely overseen by federal regulators, making the chief executive's job tough to fill in the private sector. The company, therefore, appears likely to turn to an insider as Allison's replacement.
The Wall Street Journal reported on Friday that Fannie Mae was expected to name Michael J. Williams, the company's chief operating officer and a longtime executive as Allison's replacement. Fannie Mae declined to comment.
Allison's selection presents the administration with yet another challenge. If Allison is confirmed, both Fannie Mae and Freddie Mac would be without chief executives. David Moffett, formerly Freddie Mac's CEO, resigned in March.
In Allison, the White House selected a former Merrill Lynch investment banker who became chairman of the retirement fund manager TIAA-CREF. Allison served as finance chief for John McCain's 2000 campaign for the Republican presidential nomination. But politically, Allison has shown himself to be bipartisan in his allegiances, contributing to both Democrats and Republicans, according to Federal Election Commission records.
Since taking over in September at Fannie Mae, where he took no salary, Allison, the son of an FBI agent, developed a reputation for open-mindedness with consumer advocates, even those who have had an a contentious relationship with the giant company.
"Mr. Allison is well-positioned to lead the TARP," said Scott Talbott, chief lobbyist for the Financial Services Roundtable, an industry group. "He has a wealth of experience with buying, selling, protecting, and managing assets to protect the taxpayer investment and strengthen the economy."
Some industry officials said that by pulling Allison away from Fannie Mae, the White House was signaling that TARP would remain a viable component of the government's stabilization efforts for the financial industry, even in the face of hostile lawmakers and wary bankers.
Bert Ely, a banking industry consultant, said Allison has the advantages of being a known quantity to the Obama administration who is "much more of a financial heavyweight" than Kashkari.
Plus, he said, the new job would likely be more of a challenge than running Fannie and Freddie, which have been operating under tight government oversight since last September. "In this new situation, he's going to be much more of a policy maker," Ely said. "I can understand why he would want to take it."
http://money.aol.com/article/fannie-mae-ceo-new-bailout-chief/433738
October 19, 2008
AP IMPACT: Mortgage firm
arranged stealth campaign
Freddie Mac secretly paid GOP
consulting firm to kill regulation
By PETE YOST, Associated Press Writer
WASHINGTON (AP) -- 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.
On the Net:
Freddie Mac: http://www.freddiemac.com/
Fannie Mae: http://www.fanniemae.com
September 24, 2008
FBI said to probe Fannie, Freddie, Lehman, AIG
By James Vicini
The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers Holdings Inc and insurer American International Group Inc, expanding its probe of potential corporate fraud, law enforcement officials said on Wednesday.
They said the probe of the four high-profile companies at the center of the current financial crisis that has triggered the Bush administration's proposed $700 billion bailout was in the preliminary stage and no criminal charges were imminent.
While declining to confirm that the four companies were under investigation, FBI spokesman Richard Kolko said the FBI now is probing 26 cases of potential corporate fraud related to the collapse of the U.S. mortgage lending industry.
Just last week, FBI Director Robert Mueller told the U.S. Congress that 24 cases of potential corporate fraud were under investigation.
The FBI has been under increasing pressure from lawmakers to investigate fraud related to the mortgage crisis, which has expanded to a broader credit crunch. The financial-market turmoil has prompted the Bush administration to seek a $700 billion rescue package.
A spokesman for AIG said, "We don't have details about the FBI investigation. Of course we will cooperate with the FBI." A spokeswoman for Lehman Brothers declined comment. Officials at Fannie Mae and Freddie Mac were not immediately available.
In testimony before the House of Representatives Judiciary Committee, the FBI chief vowed to pursue corporate executives if necessary in mortgage fraud cases.
Mueller said the FBI was looking at all levels of the mortgage systems. With respect to the corporate probes, which could result in federal charges, the allegations would deal with misstatements of assets, he said.
The officials refused to discuss details of the investigation, and said the matter was sensitive and could affect the stock market and any bailout.
"It's not helpful to anyone to name specific corporations under investigation," one official said.
Justice Department spokesman Brian Roehrkasse said, "As part of our investigative responsibility, the FBI conducts corporate fraud investigations. The number of cases fluctuates over time, however we do not discuss which companies may or may not be the subject of an investigation."
~ ~ ~
For more, GO TO >>> Confessions of a Whistleblower; Googling for the Vultures in AIG; The Antechamber
CHRONOLOGY OF POSTINGS
August 27, 2006: Originally posted in The Catbird Seat website.
March 13, 2007: Judge David Ezra signs Order to shut down website.
April 25, 2009: Latest update on phoenix site at www.kycbs.net
THE CATBIRD SEAT ARCHIVES
The Catbird Seat Archives: 2000-2002
The Catbird Seat Archives: 2002-2007
* * * * *
September 6, 2008
Candidates weigh in on stabilizing
Fannie, Freddie
By ALAN ZIBEL, AP
The historic takeover of Fannie Mae and Freddie Mac, which could come as soon as this weekend, moved to the forefront of the presidential campaign Saturday as candidates and congressional leaders seized on the enormous implications for taxpayers and the economy.
Fannie Mae and Freddie Mac together hold or back half of the nation's mortgage debt, and have played an increasingly important role in the real estate market since the credit crisis started in August 2007. A government bailout could cost taxpayers around $25 billion, according to the Congressional Budget Office.
Treasury Secretary Henry Paulson and two other regulators are working on a plan to put the troubled mortgage finance companies into a conservatorship, and remove Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron, according to Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee.
The government is expected to control the two companies at least a year as it evaluates and debates whether Fannie and Freddie should remain government-run entities or be restructured in some fashion, Frank said in an interview.
At a rally in Colorado Springs, Col., Republican vice presidential nominee Sarah Palin said, "They've gotten too big and too expensive to the taxpayers. The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help."
Democratic nominee Barack Obama, speaking in Terre Haute, Ind., said, "These entities are so big and they're so tied into the housing market that it is probably true that we have to take steps to make sure they don't just collapse, because the housing market, which is already weakened, would be in even worse shape if we didn't take some steps."
News of the likely government takeover Friday followed a report by the Mortgage Bankers Association that more than 4 million American homeowners with a mortgage, a record 9 percent, were either behind on their payments or in foreclosure at the end of June....
Fannie Mae and Freddie Mac lost a combined $3.1 billion between April and June. Half of their credit losses came from these types of risky loans with ballooning monthly payments.
While both companies said they had enough resources to withstand the losses, many investors believe their financial cushions could wither away as defaults and foreclosures mount.
Frank said the companies' financial picture was better than Wall Street investors assumed, but "it just plainly became clear that elements of the market wouldn't accept that."
The epic decision highlights the size of the threats facing the housing market and the economy. On Friday, Nevada regulators shut down Silver State Bank, the 11th failure this year of a federally insured bank. And earlier this year, the government orchestrated the takeover of investment bank Bear Stearns by JP Morgan Chase.
The crisis surrounding Fannie and Freddie promises to be a major challenge for the next president.
The role the two companies play in the U.S. mortgage market has grown dramatically over the past year as other lenders collapsed under the weight of bad subprime loans. The companies guaranteed about three-quarters of all new mortgages in the second quarter of this year, up from under 40 percent in 2006, according to the trade publication Inside Mortgage Finance.
Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and James Lockhart, the companies' chief regulator, met Friday afternoon with the top executives from the mortgage companies and informed them of the government's plan to put the companies into a conservatorship as early as this weekend.
In July, Congress passed a plan to provide unlimited government loans to Fannie and Freddie and to purchase stock in the companies if needed. Critics say the open-ended nature of the rescue package could expose taxpayers to billions of dollars of potential losses.
Fannie Mae was created by the government in 1938, and was turned into a public company 30 years later. Freddie Mac was established in 1970 to provide competition for Fannie.
Questions for the Republican candidate from The Catbird -
1) HOW MANY HOMES DO YOU OWN, SENATOR McCAIN?
2) ANY FORECLOSURES IN YOUR FUTURE, SENATOR McCAIN?
3) DO YOU INTEND TO BE INVOLVED IN THIS CRISIS THE SAME WAY YOU DID THE SAVINGS & LOAN CRISIS IN 1980's AND 1990's AS ONE OF THE ‘KEATING FIVE’?
Suggested Reading: Vultures in The Meadows; The Puna Connection; The Great Nest Egg Robberies; The Secret Nests: Part I - The CIA
July 15, 2008
How Fannie, Freddie Became
Kings Of The Hill
by Peter Overby, NPR
Power And Influence
Homeowners might think of Fannie Mae and Freddie Mac as just the big dogs of the mortgage business, but in Washington, D.C., they're known as big players in lobbying. The two companies managed to stave off government regulation for years by lobbying hard — and spending generously.
In the first three months of the year alone, Fannie Mae and Freddie Mac spent a combined total of about $3.5 million on lobbying and hired 42 outside firms.
That kind of clout, coupled with huge mortgage portfolios reaching into every corner of the country, illustrates why they have never lacked for confidence on Capitol Hill.
Former Rep. Jim Leach (R-IA) is an old nemesis of Fannie and Freddie. In Congress, he helped lead efforts to rein them in.
"There've been a lot of rhetorical efforts to tighten regulation, but Fannie and Freddie have both done a pretty deft job of fending that off," Leach says. "Muscular" is another word he uses to describe those efforts.
Fannie and Freddie have kept their profiles high because of their odd situation: They're not government agencies, but they're not regular corporations either. As government sponsored enterprises, or GSEs, they're often thought to have guarantees of federal support. It lets them get discounts when they borrow money.
To maintain that advantage and others, they hire well-placed politicos for big salaries.
A rival lobbyist once described Fannie Mae as a political organization that happened to be in the mortgage business.
Past executives include Democratic operatives and appointees. Former CEO Jim Johnson made headlines last month after reports that he may have received preferential treatment in real estate deals forced him out as head of Illinois Sen. Barack Obama's vice presidential search team.
It's a similar story over at Freddie Mac: Former Rep. Susan Molinari (R-NY) is a contract lobbyist, and Democratic operative Harold Ickes used to be on the board.
And the two GSEs are famous for campaign contributions to both parties.
Leach, who is now the director of Harvard University's Institute of Politics and chairman of the watchdog group Common Cause, says he finds that especially troubling.
"They have done an awful lot in terms of the money game that have caused the kinds of conflicts of interest that have bedeviled the American political system," he says.
In 2006, Fannie farmed out almost a million dollars in contributions, while Freddie forked over more than $600,000. That same year, the nation's biggest lender, Countrywide, gave $250,000.
The GSEs also raise money from others. Five years ago, a Freddie Mac document described an 18-month push by the company's lobbyists in which they held more than 75 fundraising events for members of one House committee.
Freddie Mac later was forced to pay the Federal Election Commission a record-setting $3.8 million fine.
Even now, Fannie Mae and Freddie Mac's recent troubles may not dim their influence on Capitol Hill, says Mike House, director of FM Policy Focus, a lobbying group that's campaigned for years to regulate the GSEs more strictly.
"They'll have clout because of the role they have," House says. "Whether it's more or less, we'll just have to see."
The GSEs are waiting to see, as well. Spokespeople at Freddie Mac didn't return requests for comment Monday. And executives at Fannie Mae weren't talking.
~ ~ ~
July 14, 2008
Political Networks Of Fannie Mae
And Freddie Mac
by Will Evans, NPR.org,
Fannie Mae and Freddie Mac have both had strong ties to the Washington, D.C., political community. The housing finance giants have counted government power brokers as board members and executive staff. Here, a look at key players, past and present.
Fannie Mae
James A. Johnson, former chairman and CEO: Aide to Vice President Walter Mondale; recently led Sen. Barack Obama's vice-presidential search team
Jamie Gorelick, former vice chairwoman: Deputy attorney general under President Bill Clinton; former Defense Department general counsel; member of 9/11 Commission
Franklin D. Raines, former chairman and CEO: Budget director under Clinton
Thomas E. Donilon, former executive vice president: Former assistant secretary of state under Clinton; senior adviser to Michael Dukakis' presidential campaign; national campaign coordinator for Walter Mondale's presidential campaign; congressional liaison for President Jimmy Carter.
Robert B. Zoellick, former executive vice president: Former deputy secretary of state and U.S. Trade Representative under President George W. Bush; currently president of the World Bank
Louis J. Freeh, board member: Director of the FBI under Clinton; federal judge
Stephen Friedman, former board member: Assistant to Bush for economic policy
Michele Davis, former senior vice president: Deputy assistant to Bush; currently assistant secretary of the Treasury.
Wayne Berman, outside lobbyist: Assistant Secretary of Commerce under President George H.W. Bush; senior adviser in Bush-Cheney presidential transition; currently a fundraiser for Sen. John McCain's presidential campaign.
Steve Ricchetti, outside lobbyist: Deputy chief-of-staff to Clinton
Kirsten Chadwick, outside lobbyist: Special assistant to President George W. Bush for legislative affairs; currently a fundraiser for McCain's campaign.
Freddie Mac
Richard F. Syron, chairman and CEO: Deputy assistant secretary of the Treasury
Ralph F. Boyd Jr., executive vice president: Assistant attorney general for civil rights
Dennis DeConcini, former board member: U.S. senator from Arizona
Robert R. Glauber, board member: Undersecretary of the Treasury under President George H.W. Bush
David J. Gribbin III, former board member: Aide to Vice President Dick Cheney; assistant secretary of defense under President George H.W. Bush
Harold Ickes, former board member: Adviser to President Clinton and Sen. Hillary Clinton; member of the Democratic National Committee.
Rep. Rahm Emanuel, former board member: Senior adviser to President Clinton; former chairman of the Democratic Congressional Campaign Committee and chairman of the House Democratic Caucus.
Susan Hirschmann, outside lobbyist: Chief-of-staff to former House Majority Whip Tom DeLay of Texas
Michael J. Bates, outside lobbyist: Campaign official for President Reagan, presidential candidate Bob Dole, President Bush.
Martin Paone, outside lobbyist: Secretary of the Senate
J. Patrick Cave, outside lobbyist: Acting Assistant Secretary and Deputy Assistant Secretary of the Treasury
Susan Molinari, outside lobbyist: U.S. Congresswoman from New York
Will Evans is with the Center for Investigative Reporting.
Related NPR Stories
July 14, 2008 - Wall Street Responds To Government Housing Fix
July 14, 2008 - Fannie, Freddie Critics Say Warnings Were Ignored
July 14, 2008 - Government Steps In To Rescue Fannie, Freddie
July 14, 2008 - Why It's Important To Believe In The Macs
http://www.npr.org/templates/story/story.php?storyId=92540620
July 13, 2008
US spells out Fannie-Freddie
backstop plan
By JEANNINE AVERSA, AP Economics Writer
Scrambling to bolster eroding investor confidence, the Federal Reserve and the Treasury Department announced steps to brace slumping mortgage giants Fannie Mae and Freddie Mac.
The companies' shares have plunged as losses from their mortgage holdings threatened their financial survival.
The plan, unveiled Sunday, is intended to signal the government is prepared to take all necessary steps to prevent the credit market troubles that erupted last year with losses from subprime mortgages from engulfing financial markets.
The Fed said it granted the Federal Reserve Bank of New York authority to lend to the two companies "should such lending prove necessary." They would pay 2.25 percent for any borrowed funds — the same rate given to commercial banks and big Wall Street firms.
The Fed said this should help the companies' ability to "promote the availability of home mortgage credit during a period of stress in financial markets."
Secretary Henry Paulson said the Treasury is seeking expedited authority from Congress to expand its current line of credit to the two companies and make an equity investment in the companies — if needed.
"Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies," Paulson said Sunday. "Their support for the housing market is particularly important as we work through the current housing correction."
The Treasury's plan also seeks a "consultative role" for the Fed in any new regulatory framework eventually decided by Congress for Fannie and Freddie. The Fed's role would be to weigh in on setting capital requirements for the companies.
Sen. Christopher Dodd, chairman of the Senate Banking Committee, on Monday called the Bush administration's actions Sunday "probably the right steps" and said he will summon Paulson, Fed Chairman Ben Bernanke and Securities and Exchange Commission chairman Christopher Cox to a committee hearing to answer questions.
"What's important here as well is to calm people's fears," Dodd said in an interview on CBS' "The Early Show."
He also drew a distinction between last week's failure of IndyMac — which engaged in originating riskier mortgages than traditional community and regional banks — and the two mortgage giants.
"There's a big difference between IndyMac and Fannie and Freddie," Dodd said. "IndyMac engaged in very bad mortgages, luring people into deals they could never afford. That's not the case with Fannie and Freddie." Dodd said that while there may be more bank failures, "I'm more optimistic about Fannie and Freddie than I am about these banks."
The White House, in a statement, said President Bush directed Paulson to "immediately work with Congress" to get the plan enacted. It also said it believed the steps outlined by Paulson "will help add stability during this period."
Investors may not be as sanguine, however, according to Chris Johnson, an investment manager and president of Johnson Research Group in Cleveland. Stocks of financial institutions "are going to get clobbered," he predicted. "It is a situation where regulators and the government are trying to play catch up, and that means everything is not discounted in the stock prices yet."
The Dow Jones industrials on Friday briefly fell below 11,000 for the first time in two years and Johnson said shares of investment banks and regional banks could move even lower as investors react to this weekend's developments.
Fannie Mae and Freddie Mac hold or back $5.3 trillion of mortgage debt, about half the outstanding mortgages in the United States.
The government denied it, but what has been seen by investors as an implicit guarantee of support has allowed Fannie and Freddie over the years to borrow at rates only slightly higher than the Treasury — and lower than what their banking competitors had to pay.
"This really blows away the notion of an implicit guarantee," independent banking consultant Bert Ely said of the Treasury's plan to ask Congress to allow it to make equity investments in Fannie Mae and Freddie Mac. "It suggests a greater concern about how these companies are doing. It says the problems are deeper. It gets to the solvency of the companies, not just the liquidity."
A critical test of confidence will come Monday morning, when Freddie Mac is slated to auction a combined $3 billion in three- and six-month securities.
Senate Majority Leader Harry Reid, D-Nev., said "Senate Democrats stand ready to work with the administration to quickly and effectively address the situation currently facing these institution."
House GOP leader John Boehner, R-Ohio, and Republican Whip Roy Blunt, R-Mo., said they "stand ready to work with Secretary Paulson and congressional Democrats to take appropriate steps to ensure the soundness of our mortgage markets."
Democratic presidential contender Barack Obama said the government's main concern should be "to make sure that home ownership remains attainable and affordable for American families. Second, any measures should protect taxpayers and not bailout the shareholders and management of Fannie Mae and Freddie Mac."
Republican rival John McCain believes the measures announced Sunday "are consistent with the goal of providing support for a path through the current duress toward steps that include regulatory reform, market discipline and mission focus," said Douglas Holtz-Eakin, senior policy adviser.
~ ~ ~
July 11, 2008
Fears rise on trillion-dollar trouble
for Fannie Mae and Freddie Mac
by Rob Lever, AFP
US mortgage giants Fannie Mae and Freddie Mac are facing growing pressure as fears intensify about a potential calamity at the firms, which underpin trillions of dollars in home loans.
On Thursday, Freddie Mac shares plunged 22 percent to eight dollars, and are down over 40 percent this week and 75 percent this year.
Fannie Mae sank 14 percent to 13.20 dollars, down 26 percent in the week and 64 percent for the year.
"The twin titans of lending both face pessimism, from the options pits and analysts," said Mark Fightmaster at Schaeffer's Investment Research.
Analysts at Charles Schwab & Co. said the shares were roiled by "sobering comments about the solvency of Fannie Mae and Freddie Mac."
One research note this week said the two firms may have to raise tens of billions of dollars in fresh capital under new accounting rules to offset massive losses in their home loan portfolios.
A report in the Wall Street Journal said the Bush administration has held talks about what to do in the event the two firms falter.
The daily said the discussions have been going on for months as part of normal contingency planning but had become more serious recently.
Treasury Secretary Henry Paulson told a congressional panel Thursday that Fannie Mae and Freddie Mac are "adequately capitalized."
Speaking to the House Committee on Financial Services, Paulson said the two government chartered, shareholder-owned finance firms are "working through this challenging period" of a horrific housing slump that has hammered credit markets.
The two firms "play an important role in our housing markets today and need to play an important role in the future," he said.
"Their regulator has made clear that they are adequately capitalized."
At the same hearing, Federal Reserve chairman Ben Bernanke said the government-sponsored firms "are well capitalized now in ... a regulatory sense."
Bernanke added however that it was necessary for "all financial institutions to expand their capital bases so that they can be even more proactive in providing credit and support for the economy."
The two firms, which have no explicit government backing despite their government charter, provide liquidity to the housing market by buying mortgages and repackaging them in securities sold to investors.
Freddie Mac has a loan portfolio of 1.5 trillion dollars and Fannie Mae's is over 700 billion. Together they own or guarantee some 5.2 trillion dollars in loans, or about 40 percent of the total value of home loans in the United States.
Fred Dickson, analyst at DA Davidson & Co, said the tumble in the share prices reflected "renewed concerns about the availability of capital to restructure beleaguered financial institutions including Fannie Mae and Freddie Mac."
He said Fannie Mae's sale this week of three billion dollars in notes marked "a record spread versus US Treasury notes indicating the reluctance of buyers to fund the troubled mortgage lender," which could put its AAA credit rating in jeopardy.
The Wall Street Journal reported that among the options being considered was an explicit federal guarantee for the debt of the companies, which would be politically difficult. Another possibility would be an equity investment from the government.
Meanwhile Peter Schiff at Euro Pacific Capital said the two giants are likely to need government bailouts in view of the "dubious quality of their mortgage portfolios."
"Together both firms have less than 90 billion dollars in capital reserves to ensure losses on more than five trillion dollars in mortgage debt," he said.
"Could anyone reasonably believe that a two percent reserve fund can cover all the losses that are likely to be seen? ... Clearly, Fannie and Freddie would have no ability to survive without a government bailout. This means that taxpayers will be on the hook for hundreds of billions of losses, perhaps even more than one trillion."
Copyright © 2008 Agence France Presse. All rights reserved.
RALPH F. BOYD, JR.
CHAIRMAN AND CEO,
FREDDIE MAC FOUNDATION &
EXECUTIVE VICE PRESIDENT,
COMMUNITY RELATIONS, FREDDIE MAC
Ralph F. Boyd, Jr. is Freddie Mac's Executive Vice President, Community Relations, and reports to Chairman and CEO Richard F. Syron. Boyd also is Chairman, President and CEO of the Freddie Mac Foundation, and serves on the Foundation's Investment Committee. In these roles, he oversees one of the national capitol region's most extensive philanthropic programs, which includes corporate giving, employee volunteer activities, and Foundation grant making. Boyd also serves as a director of the Home Ownership Funding Corporation I and II, two real estate investment trust subsidiaries of Freddie Mac.
Boyd started at Freddie Mac as Executive Vice President and General Counsel. In addition to supervising the company's legal operations, he also was responsible for overseeing Freddie Mac's regulatory relations and legislative activities at the federal, state, and local levels, and the company's internal and external communications functions.
Prior to joining Freddie Mac, Boyd was a senior partner of Alston & Bird LLP, leading its Washington, D.C. litigation practice. Before that, he served as Assistant Attorney General of the United States for Civil Rights, and as head of the Civil Rights Division, U.S Department of Justice. From 1997 to 2001, Boyd was counsel and then a partner in the Trial and Litigation Department of Goodwin Procter LLP in Boston. During the 1990's, he served for six years as an Assistant U.S. Attorney in the Criminal Division of the Boston U.S. Attorney's office. Following law school, Boyd was a law clerk to the Honorable Joseph H. Young, U.S. District Judge for the District of Maryland, after which he served as a litigation associate at the Boston law firm of Ropes & Gray for four years.
Boyd has a long history of involvement in community affairs, and currently serves on several non-profit boards. He is Vice-Chairman of Easter Seals of the Greater Washington-Baltimore Region, and a Trustee of the National Housing Partnership Foundation (NHPF), a non-profit developer and provider of quality, affordable multi-family housing. In addition, Boyd chairs NHPF's Audit Committee, and is a member of NHPF's Investment Committee. He also is a member of the Executive Committee of the Board of Directors of the American Association of People with Disabilities, and serves as Secretary of the Board of Directors of the Center City Public Charter Schools.
Boyd is a Director of the DIRECTV Group, Inc., and a member of its Audit and Nominating and Governance committees. He previously served as the U.S. member of the U.N. Committee on the Elimination of Racial Discrimination – a Geneva-based United Nations human rights treaty compliance body.
Boyd is a graduate of the Harvard Law School, and Haverford College. He received an honorary Doctor of Law degree from the Suffolk University Law School.
Created by Freddie Mac in 1991, the Freddie Mac Foundation is dedicated to making home a place where children and their families thrive. As the largest corporate funder in the Washington, DC metropolitan area, Freddie Mac and the Freddie Mac Foundation have invested more than $321 million in organizations serving the community.
http://www.freddiemacfoundation.org/aboutus/boyd.html
http://www.kycbs.net/CV05-00030-Witness-Boyd-Ralph.htm
April 13, 2007
Sallie Mae in talks to go private: report
NEW YORK (Reuters) - Sallie Mae (NYSE:SLM - news), the largest U.S. student loan company, is in talks to be bought out by private equity in a deal that could top $20 billion, the New York Times reported on its Web site on Friday.
Negotiations appear to be at a late stage, but many hurdles remain and it was unclear that a deal would be reached, the Times said, citing unnamed sources.
The Blackstone Group is one potential bidder, the Times said.
Sallie Mae and Blackstone could not immediately be reached for comment.
Sallie Mae recently agreed to pay $2 million to settle an investigation into financial arrangements it was accused of making with U.S. colleges and universities and change some of its business practices.
December 18, 2006
Ex-Fannie Mae CEO, others charged
with manipulating earnings
By Greg Morcroft, MarketWatch
NEW YORK (MarketWatch) -- Federal regulators said Monday they have filed charges against three former Fannie Mae executives, former Chairman and CEO Franklin Raines, former Vice Chairman and Chief Financial Officer J. Timothy Howard, and former Senior Vice President and Controller Leanne G. Spencer.
The Office of Federal Housing Enterprise Oversight (OFHEO)said the charges, "reveal how the individuals improperly manipulated earnings to maximize their bonuses, while knowingly neglecting accounting systems and internal controls, misapplying over twenty accounting principles and misleading the regulator and the public."
OFHEO said it will seek civil penalties of up to $100 million from the former executives, and the return of bonuses totaling up to $115 million from the three.
August 25, 2006
No Criminal Charges
Fannie Mae Won't Be Prosecuted Over
Accounting Problems, Government Says
By MARCY GORDON, Associated Press
WASHINGTON - Fannie Mae, the government-sponsored mortgage lending giant, won't face criminal charges over its multibillion-dollar accounting irregularities, the U.S. attorney's office said Thursday after two years of investigation.
"We have informed them that we are declining all charges against the company," said Channing Phillips, spokesman for U.S. Attorney Kenneth Wainstein.
He confirmed the news announced earlier Thursday by Fannie Mae, which helps finance one of every five home loans in the United States.
In May, the company was fined a record $400 million in a civil settlement with the Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight over accounting problems and what regulators said was earnings manipulation by the company. A report issued by the oversight office said Fannie Mae employees manipulated accounting to hit quarterly earnings targets so that senior executives could pocket hundreds of millions in bonuses from 1998 to 2004.
Although it has reached a settlement with the company, the SEC still could bring civil actions against individual executives, with the burden of proof less stringent than in criminal prosecutions.
And the Office of Federal Housing Enterprise Oversight "is currently reviewing potential civil and administrative actions against former executives of Fannie Mae," agency spokeswoman Stefanie Mullin said Thursday. James B. Lockhart, director of the oversight office, has said the agency will pursue some executives to recover bonus money they reaped in the accounting scheme - if the company itself fails to do so.
Earlier this month, Fannie Mae said it hoped to complete a multibillion-dollar restatement of its 2004 earnings by the end of this year. The company has not filed an earnings statement since late 2004. The earnings correction is expected to reach some $10 billion.
The company acknowledged then - after its independent auditor, KPMG, refused to sign off on its earnings report - that some of its accounting practices didn't comply with generally accepted accounting principles.
By the end of 2004, Franklin Raines, who had been President Clinton's White House budget director, was forced out as Fannie Mae's chief executive, along with Timothy Howard, the lending giant's chief financial officer.
Justice Department officials have never publicly confirmed that any Fannie Mae executives were also under investigation in the case.
One knowledgeable Justice official said Thursday that it was not expected that any individuals would be charged. This individual requested anonymity because, while the investigation of the company has been closed, the overall investigation has not yet been officially closed.
October 1, 2003
SEC Investigating Fraud at Freddie Mac
Stephen Taub, CFO.com
Securities and Exchange Commission Chairman William Donaldson said Tuesday that the regulatory agency is looking into whether fraud was committed at mortgage finance company Freddie Mac.
"If there is evidence of fraud…we would have a role there," Donaldson told the Senate Banking Committee, according to wire service reports. "We are looking at that right now."
Donaldson pointed out that the SEC is uninvolved in the accounting investigation being conducted by Freddie Mac's regulator, the Office of Federal Housing Enterprise Oversight (OFHEO). However, he did note that the commission's job is to investigate fraud, that Freddie Mac has agreed to voluntary registration with the SEC, and that the commission is helping the company conform with SEC registration rules on securities.
At about the same time that Donaldson was testifying, a spokesman for the House Financial Services Committee said that on October 8, the committee expects to consider legislation proposed by the Treasury Department that would strengthen OFHEO, which regulates Fannie Mae as well as Freddie Mac.
OFHEO, which is now part of the Department of Housing and Urban Development, would become a bureau of the Department of the Treasury. However, HUD would retain some authority in setting the mortgage companies' goals for affordable housing, Treasury Secretary John Snow said in testimony earlier this month, according to Dow Jones.
Last week James R. Doty, the former SEC general counsel who looked into accounting failures at Freddie Mac, said that his investigation did not reveal "rampant, criminal misconduct" at the mortgage giant, though he did cite inadequacies in the company's accounting related to derivatives.
The mortgage company said at the time that it would delay the release of its restated financials, originally expected by September 30, until November. When Freddie Mac finally issues the restatement, it could exceed $4.5 billion, the upper end of the previously announced range.
June 17, 2003
Freddie Mac fraud regulation
bill faces shake-up
By Michael S. Gerber and Sarita Chourey, The Hill News
The authors of House legislation that would strengthen federal regulation of Freddie Mac and Fannie Mae want Freddie’s accounting troubles to ignite interest in their bill, which failed to move in the last Congress.
But with only a few co-sponsors and a Senate that at this point seems to favor a wait-and-see approach, the bill faces unlikely odds.
Introduced by Reps. Christopher Shays (R-Conn.) and Ed Markey (D-Mass.), the “Leave No Securities Behind Act” would require the two mortgage giants to obey the same federal securities registration and reporting requirements as other corporations.
Following the departure of three of Freddie’s senior executives last week, Shays and Markey sent a “Dear Colleague” letter to House lawmakers. Five other House members signed on as co-sponsors of the bill later in the week.
Betsy Hawkings, Shays’s chief of staff, said: “The fact that the second and fourth largest [financial services companies] are unregulated is receiving publicity. If that issue is being publicized, the more likely it is that the bill will receive support.” She added, “I do think the shake-up has renewed calls for legislation.”
Rep. Richard Baker (R-La.), chairman of a House Financial Services subcommittee that oversees the two government-sponsored enterprises (GSEs) and a past critic of GSEs, announced his intentions to hold hearings on the matter.
But key senators expressed no sense of urgency about holding hearings on the alleged accounting fraud at Freddie Mac, saying they would wait for regulators to conduct a full investigation. Both the Securities and Exchange Commission (SEC) and federal prosecutors have announced investigations into the company’s finances.
Senate Banking Chairman Richard Shelby (R-Ala.) said last week that the committee would likely hold hearings, but added: “We want to make sure we do it in a measured way and we wait on the SEC and the others of jurisdiction.”
Another senior Republican on the committee, Utah Sen. Bob Bennett, said a congressional investigation is unnecessary “unless there’s any indication of safety and soundness issues, and I have heard no one make those allegations. Let’s leave it to the regulators.”
Democrats on the committee agreed.
“There’s already going to be a rush of [investigations],” said Sen. Christopher Dodd (D-Conn.). “Before deciding what to do, we have to know what happened first. I applaud the examination and from that we ought to decide whether or not … new procedures should be in place to regulate Freddie Mac more closely. ... I’ve been supporting Freddie Mac and Fannie Mac. ... I think they’ve done a very good job.”
Sens. Tim Johnson (D-S.D.) and Debbie Stabenow (D-Mich.) said Congress needed to keep an eye on the investigations but expressed support for Fannie Mae and Freddie Mac....
But advocates for stronger regulation of Freddie Mac and Fannie Mae think Congress needs to take an active role in the investigation into Freddie Mac’s alleged accounting fraud. FM Policy Focus, a group of Freddie and Fannie competitors and other business trade organizations, is trying to use Freddie’s troubles to jumpstart its campaign against the GSEs.
“This could be the tip of the iceberg,” said Virginia Hume of QuinnGillespie, one of several public affairs firms representing FM Policy Focus.
The Fannie and Freddie critics are using the announced investigations to revitalize their two top priorities: preventing the GSEs from expanding their mission beyond the secondary mortgage market and pushing for regulation of the GSEs under the Treasury Department or Federal Reserve.
Currently, the GSEs’ main regulator is the Office of Federal Housing Enterprise Oversight (OFHEO), located within the Department of Housing and Urban Development (HUD), but they also report directly to the HUD secretary’s office....
One Freddie Mac lobbyist said the companies were not worried about any legislative fallout from the company’s recent actions. “We feel good about these hearings because this is a great story to tell — the restatements [of earnings] are going to be up, not down,” the lobbyist said. “There was one guy that did some bad stuff, and the board was very aggressive in handling that the way Congress envisioned boards doing when it passed Sarbanes-Oxley — this was an example of the way things should work.”
Shays and Markey disagree, saying in their “Dear Colleague” letter that “Freddie Mac is restating its earnings and endlessly delaying release of that restatement, yet the securities laws can barely touch it.” Their letter also criticizes the company for not voluntarily registering issuances of common stock with the SEC, something Fannie Mae did for the first time last year.
“This week’s news clearly demonstrates the harm in exempting Freddie Mac and Fannie Mae from the federal securities laws,” Shays and Markey wrote. “It also illustrates why voluntary disclosure, of the type preferred by these two companies, is meaningless.
www.hillnews.com/business/061703_freddiemac.aspx
# # #
MORE TO COME
For now, here are some more “birds of a feather” that
you’ll also find building nests in this tree...
AIG: THE UN-AMERICAN INSURANCE GROUP
AMERICAN SAVINGS BANK: BEHIND THE BLINDS
CITIGROUP: VAMPIRES IN THE CITY
CONFESSIONS OF A WHISTLEBLOWER
A CONNECTICUT YANKEE IN KING KAMEHAMEHA’S COURT
DIRTY MONEY, DIRTY POLITICS & BISHOP ESTATE
FIRST INSURANCE COMPANY OF HAWAII
HUD: THE HOUSING & URBAN DISASTER
THE KAMEHAMEHA SCHOOLS PENSION PLAN
MARSH & McLENNAN: THE MARSH BIRDS
MARSH & McLENNAN’S GUY CARPENTER
THE PRUDENTIAL: A NEST ON SHAKY GROUND
THE SILENCE OF THE WHISTLEBLOWERS
TRANSYLVANIA TRAVELERS IN ST. PAUL
CITIGROUP: VAMPIRES IN THE CITY
VAMPIRES IN THE VESTA INSURANCE GROUP
ZEROING IN ON ZURICH FINANCIAL SERVICES
# # #
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