Fannie and Freddie Break Up Their Powerhouse Lobbying Operations
Wednesday, October 1, 2008
Mortgage finance giants Fannie Mae and Freddie Mac have dismantled their powerful lobbying corps, removing two dozen people who made up one of Washington's most formidable advocacy teams.
The departures came after the government announced that all lobbying by the companies would end while they are under federal control.
The companies had previously announced the departures of chief lobbyists Duane Duncan of Fannie Mae and Timothy J. McBride of Freddie Mac. Most of the other members of their operations have since been let go as well, according to several sources familiar with the matter who spoke on condition of anonymity because they were not authorized to speak publicly about the departures.
Before they were taken over by the government, Fannie Mae and Freddie Mac spent millions of dollars a year on internal and outside lobbyists to keep politicians at bay, countering legislative efforts to regulate them more closely.
Now, their chief emissary before Congress is the government agency that runs them -- the Federal Housing Finance Agency. The agency's director, James B. Lockhart III, is serving as the primary conduit between the companies and Capitol Hill, the sources said.
The people who were let go include registered federal lobbyists and others who support the lobbying team, such as state lobbyists or teams that work on advocacy with other companies. A handful of members of the lobbying groups remain at the companies.
The new chief executives are still deciding what the remaining members of the government and industry relations teams, as they were called, will do.
"We're in the process of restructuring our government and industry relations department in light of the company discontinuing its lobbying activities. We're working closely with FHFA on this as we move forward," Fannie Mae spokesman Brian Faith said.
Douglas Duvall, a Freddie Mac spokesman, said the structure of its group was still being determined. "Our government and industry relations division has ceased all lobbying activities -- and it is being fundamentally refocused and reduced in size," he said.
Fannie Mae and Freddie Mac's lobbying operations were at the pinnacle of their power in the 1980s and 1990s, battling a variety of opponents. In one camp were those who thought the companies had gotten too big and posed a risk to the financial system. Another included mortgage finance competitors who thought the government-sponsored status gave Fannie Mae and Freddie Mac an unfair advantage in the marketplace. Still others said the companies used their affordable-housing programs to cultivate political allies.
The companies were largely successful in fending off the critics. When lawmakers pursued measures that the companies found unfriendly, lobbyists would respond vociferously. For instance, they'd routinely visit lawmakers and show them how many constituents became homeowners because of Fannie Mae or Freddie Mac, according to one former lobbyist.
Eventually, though, the companies began to lose their clout after they found themselves mired in a pair of unrelated accounting scandals a few years ago. Then the firms got caught in the downdraft of the housing meltdown that led to the government takeover.