McCain Transition Head Lobbied for Freddie Mac Before Takeover

Discussion in 'Wall St. News' started by eminitrader007, Sep 23, 2008.

  1. Now it's NYT's fault..........;_ylt=Ap.fg33mCQLz9xX6C52f.CcDW7oF

    Jonathan D. Salant and Timothy J. Burger
    Tue Sep 23, 12:05 AM ET

    Sept. 23 (Bloomberg) -- The lobbying firm of the man Republicans say John McCain has chosen to begin planning a presidential transition earned more than a quarter of a million dollars this year representing Freddie Mac, one of the companies McCain blames for the nation's financial crisis.


    Timmons & Co., whose founder and chairman emeritus is William Timmons Sr., was registered to lobby for Freddie Mac from 2000 through this month, when the federal government took over both Freddie Mac and Fannie Mae.

    Newly available congressional records show Timmons's firm received $260,000 this year before its lobbying activities were barred under terms of the government rescue of the failed mortgage giant. Timmons, 77, is listed as a lobbyist for Freddie Mac on the company's midyear financial-disclosure form.

    While Republicans say Timmons is making plans for the transition if McCain wins in November, the campaign wouldn't confirm his role. Timmons didn't return a phone call seeking comment.

    McCain has labeled Freddie Mac and Fannie Mae as prime culprits in creating the financial storm that has roiled Wall Street and Washington.

    ``At the center of the problem were the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac,'' he said last week in Green Bay, Wisconsin.

    ``Using money and influence, they prevented reforms that would have curbed their power and limited their ability to damage our economy,'' he said. ``And now, as ever, the American taxpayers are left to pay the price for Washington's failure.''

    `Cooked the Books'

    McCain has criticized Democratic nominee Barack Obama in both television advertising and speeches for his ties to former Fannie Mae chief James Johnson.

    ``Fannie cooked the books and Johnson made millions,'' said a McCain ad, released Sept. 19. ``Then Obama asked him to pick his VP and raise thousands for his campaign.''

    Johnson is listed on Obama's Web site as having raised between $200,000 and $500,000 for the campaign. He left Obama's vice presidential search committee June 11 after just a week, following reports that he received preferential mortgage rates from Countrywide Financial Corp., which suffered losses due to the collapse of the subprime-mortgage market and was bought by Bank of America Corp.

    McCain's campaign also ran an advertisement that said Obama had received advice on housing issues from a more recent Fannie Mae chief executive officer, Franklin Raines.

    Under Fire

    Raines said he had only met Obama once, before Obama was sworn in as a senator in January 2005. ``I am not an adviser to Barack Obama, nor have I provided his campaign with advice on housing or economic matters,'' Raines said in a statement released last week by the campaign.

    Campaign-finance reports show that Raines hasn't contributed money to the Obama presidential campaign either.

    Timmons is a longtime power in the Washington lobbying industry whose clients include the American Petroleum Institute and Chrysler LLC. Visitors to the company's Web site are told that ``Timmons and Company pioneered the concept and the industry standard for Washington representation.''

    He founded the company in 1975 after leaving the administration of President Gerald Ford, and has worked to elect every Republican presidential nominee since.

    When asked about his role in the McCain campaign, spokesman Brian Rogers said: ``We're not discussing any aspect of the transition.'' An aide to Timmons who didn't give her name while taking a message at his lobbying firm said that only Timmons himself could discuss ``his work for Senator McCain.''

    Times Flap

    The McCain camp was also dealing with reports about the lobbying work of campaign manager Rick Davis.

    The New York Times reported yesterday that Davis was paid almost $2 million in fees over five years by a group primarily funded by Freddie Mac and Fannie Mae that was intended to help stave off more stringent federal regulation of the housing companies.

    McCain campaign spokesman Tucker Bounds said other members of the Homeownership Alliance included Habitat For Humanity and the National Council of La Raza, saying the group ``was focused strictly on promoting homeownership.''

    McCain senior adviser Steve Schmidt accused the Times of being biased toward Obama. ``Whatever the New York Times once was, it is today not by any standard a journalistic organization,'' Schmidt said on a conference call with reporters. ``It is a pro-Obama advocacy organization.''

    To contact the reporters on this story: Jonathan D. Salant in Washington at ; Timothy J. Burger in Washington at .
  2. McCain has lied away the honor he so well deserved for serving America. His "Straight Talk" has turned into lies and deceit. His response to the current economic crisis should bring pause to anyone who wants him to run this country.
  3. Also from NYT:

    September 11, 2003
    New Agency Proposed to Oversee Freddie Mac and Fannie Mae

    The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

    Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

    The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

    The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

    ''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.

    Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.

    The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.

    The proposal is the opening act in one of the biggest and most significant lobbying battles of the Congressional session.

    After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.

    ''The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,'' Mr. Oxley said at the hearing. ''We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,'' the independent agency that now regulates the companies.

    ''These irregularities, which have been going on for several years, should have been detected earlier by the regulator,'' he added.

    The Office of Federal Housing Enterprise Oversight, which is part of the Department of Housing and Urban Development, was created by Congress in 1992 after the bailout of the savings and loan industry and concerns about regulation of Fannie Mae and Freddie Mac, which buy mortgages from lenders and repackage them as securities or hold them in their own portfolios.

    At the time, the companies and their allies beat back efforts for tougher oversight by the Treasury Department, the Federal Deposit Insurance Corporation or the Federal Reserve. Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families. This year, however, the chances of passing legislation to tighten the oversight are better than in the past.

    Reflecting the changing political climate, both Fannie Mae and its leading rivals applauded the administration's package. The support from Fannie Mae came after a round of discussions between it and the administration and assurances from the Treasury that it would not seek to change the company's mission.

    After those assurances, Franklin D. Raines, Fannie Mae's chief executive, endorsed the shift of regulatory oversight to the Treasury Department, as well as other elements of the plan.

    ''We welcome the administration's approach outlined today,'' Mr. Raines said. The company opposes some smaller elements of the package, like one that eliminates the authority of the president to appoint 5 of the company's 18 board members.

    Company executives said that the company preferred having the president select some directors. The company is also likely to lobby against the efforts that give regulators too much authority to approve its products.

    Freddie Mac, whose accounting is under investigation by the Securities and Exchange Commission and a United States attorney in Virginia, issued a statement calling the administration plan a ''responsible proposal.''

    The stocks of Freddie Mac and Fannie Mae fell while the prices of their bonds generally rose. Shares of Freddie Mac fell $2.04, or 3.7 percent, to $53.40, while Fannie Mae was down $1.62, or 2.4 percent, to $66.74. The price of a Fannie Mae bond due in March 2013 rose to 97.337 from 96.525.Its yield fell to 4.726 percent from 4.835 percent on Tuesday.

    Fannie Mae, which was previously known as the Federal National Mortgage Association, and Freddie Mac, which was the Federal Home Loan Mortgage Corporation, have been criticized by rivals for exerting too much influence over their regulators.

    ''The regulator has not only been outmanned, it has been outlobbied,'' said Representative Richard H. Baker, the Louisiana Republican who has proposed legislation similar to the administration proposal and who leads a subcommittee that oversees the companies. ''Being underfunded does not explain how a glowing report of Freddie's operations was released only hours before the managerial upheaval that followed. This is not world-class regulatory work.''

    Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

    ''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

    Representative Melvin L. Watt, Democrat of North Carolina, agreed.

    ''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.
  4. ''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

    Representative Melvin L. Watt, Democrat of North Carolina, agreed.

    ''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

    And Barney Frank is involved in the recovery process? Puh-lease.