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DeMint: End Fannie & Freddie Lobbying

July 17, 2008

DeMint: End Fannie & Freddie Lobbying

Taxpayer buyout of Fannie Mae and Freddie Mac should stop lobbying and political activities

Washington, D.C. – Today, U.S. Senator Jim DeMint (R-S.C.) announced that if there is any federal buyout of Fannie Mae and Freddie Mac it must include an immediate end to lobbying and political activities, including donations to think-tanks and other non-profit organizations.

“If American taxpayers are forced to buyout Fannie Mae and Freddie Mac, their lobbying and political activities should stop,” said Senator DeMint. “Currently, the Department of Treasury cannot retain high-powered lobbyists or make political contributions to candidates, and the same rules should apply to Fannie and Freddie. If we plan to use taxpayer dollars to buy shares of these troubled companies, they should be treated like other federal entities. Any legislation exposing taxpayers to this risk should include a serious debate on long-term reforms, and a ban on lobbying must be included.”

This morning, Politico reported: “If you want to know how Fannie Mae and Freddie Mac have survived scandal and crisis, consider this: Over the past decade, they have spent nearly $200 million on lobbying and campaign contributions. But the political tentacles of the mortgage giants extend far beyond their checkbooks. The two government-chartered companies run a highly sophisticated lobbying operation, with deep-pocketed lobbyists in Washington and scores of local Fannie- and Freddie-sponsored homeowner groups ready to pressure lawmakers back home.”

National Public Radio reports that, “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.” According to the Center for Responsive Politics, Fannie Mae and Freddie Mac have been such prolific donors to political parties, candidates and PACs that they are the #1 and #3 top contributors in the mortgage industry and rank in the Top 100 political donors of all time.

“Washington is in a frenzy to ‘do something’ about the mess at Fannie Mae and Freddie Mac, but Congress should not rush to use this ‘crisis’ to put the United States government in the mortgage business. Everyone should be skeptical of putting taxpayers on the hook for entities that have over $5 trillion in liabilities, while our national debt is already over $9 trillion. Congress created this problem by creating special rules at Fannie Mae and Freddie Mac and ignored the problem for years. We must ensure proper reforms are included to avoid taxpayers having to bail them out again and again.”

On July 13, the New York Times wrote in an article titled “Protected by Washington, Companies Ballooned”:

“In Washington, Fannie and Freddie’s sprawling lobbying machine hired family and friends of politicians in their efforts to quickly sideline any regulations that might slow their growth or invite greater oversight of their business practices. Indeed, their rapid expansion was, at least in part, the result of such artful lobbying over the years.

…Even after accounting scandals arose at the two companies a few years ago, attempts to push through stronger oversight were stymied because few politicians, particularly Democrats, wanted to be perceived as hindering the American dream of homeownership for the masses.

Lots of perks came with Fannie and Freddie’s charters and government backing: exemptions from state and local taxes, relatively meager capital requirements, and an ability to borrow money at rock-bottom rates.

…Critics say that current housing legislation before Congress could give even more power to Fannie and Freddie by allowing them to venture into new mortgage-related businesses.”

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