Fannie, Freddie Keep Up Lobbying

Fannie Mae and Freddie Mac last year together spent nearly $23 million on lobbying, as Congress considered legislation to tighten oversight of the two mortgage finance companies in response to their multibillion-dollar accounting scandals.

According to records filed last week with the House of Representatives, the two companies remained among the most prolific corporate spenders on lobbying, despite controversy over their efforts to influence lawmakers.

The two companies are heavily regulated by Congress and chartered with a public mission of encouraging homeownership. Critics argue that their lobbying has been too geared toward trying to avoid tighter regulation and toward benefiting stockholders.

Freddie Mac spent $12.6 million on lobbying, down from $15.44 million in 2004 but still enough to place it 11th among corporations that so far have filed lobbying disclosure forms for 2005, according to the Web site PoliticalMoneyLine. Fannie Mae was 15th. The rankings are likely to change because many of the 2005 filings are still being processed, but in previous years Fannie Mae and Freddie Mac routinely ranked in the top 25.

Fannie Mae spent $10.1 million, up from $8.78 million in 2004 -- an increase that puzzled some campaign finance experts given Fannie Mae's pledges to cut back its extensive lobbying network.

According to details provided by the company, Fannie Mae did reduce its spending last year on outside lobbyists by 24 percent, to $3.7 million, canceling contracts with several firms and pulling the plug on public affairs advertising.

But Fannie Mae's in-house lobbying costs rose 64 percent, to $7 million. That occurred despite the fact that the company laid off 20 grass-roots lobbyists and publicists who helped oversee one of the largest political networks ever created by a company. For more than a decade, Fannie Mae's 55 "partnership offices" gave it the ability to lobby elected officials in their home districts as well as in Washington.

For spending to have increased, "you would expect the number of lobbyists they employed to have increased or some variation of that like opening a new office," said Alex Knott of the Center for Public Integrity.

Fannie Mae officials, however, attributed the growth in lobbying costs to the rapid increase last year in the company's administrative expenses -- part of which are, under company accounting rules, apportioned to its in-house lobbying operation.

Fannie Mae's administrative expenses have skyrocketed over the past year as it faces several government probes, shareholder lawsuits and the task of cleaning up its books. Federal regulators ordered the company to restate its earnings for 2001 through 2004.

In an August filing with the Securities and Exchange Commission, the company estimated its administrative expenses during the first six months of 2005 at $952 million, compared with $767 million for the comparable period a year earlier.

Under federal regulations on lobbying registration, companies have a lot of leeway to account for overhead costs associated with lobbying.

Freddie Mac, which has already restated its income upward by $5 billion, is closer to resuming quarterly financial reporting than Fannie Mae.