Freddie Mac Under Self-Imposed Investigation
The Associated Press has revealed that Freddie Mac has hired lawyers to investigate their own two million dollar lobbying campaign designed to stop regulations against the company before the recent crash of the housing market. It is unknown at this time how much the investigation will cost or whether federal bailout money will help pay for it. The firm was put under government control in November because of extensive debt. A leadin Washington, D.C. law firm, Covington and Burling LLP, has been conducting interviews with current Freddie Mac employees and persons no longer with the firm. All persons interviewed are cooperating on an anonymous basis. The lead investigator in the inquiry is a former Justice Dept. prosecutor named Stephen Anthony, whose legal specialty is corporate inquiries.
The Chairman of the Board of Freddie Mac, John Koskinen, has confirmed the investigation before declining further comment. Investigator Anthony has not been available for comment. The investigation is ongoing whilst President Obama recently awarded an additional $200 billion in government assistance to the financial giant and the even bigger mortgage company, Fannie Mae. The governing body in control of Freddie Mac’s business activities is the new Federal Housing Finance Agency.
The investigation was spurred by accusations that the firm hired DCI Group, a Washington consulting agency, to prevent the passing of a bill that would have forced Fannie Mae and Freddie Mac to liquidate hundreds of billions in assets. The chief sponsor of the bill was Senator Chuck Hagel, a Republican from Nebraska. The DCI group failed to file lobbying reports detailing the services they provided for Freddie Mac. Insiders say that executives at Freddie Mac aware of the initiative nicknamed it “the stealth lobbying campaign.” A DCI Group spokesman claims that no laws or regulations were broken and that the highest ethical standards were adhered to.
Investigator Anthony’s investigation centers around 3 key issues raised by AP stories:
A disclosure of the work done by DCI Group for the two million it received from Freddie Mac. The efforts reportedly were aimed at 17 Republicans in the Senate from 13 states with the goal of defeating Sen. Hagel’s bill, which was never voted on.
Details of work performed by 52 outside lobbying agencies and political consultants who received substantial payments from Freddie Mac totaling in excess of eleven million dollars. The consultants in question include former Speaker of the House Newt Gingrich and former Senator Alfonse D’Amato.
Disclosure of personal use by the firm’s executives of company-purchased tickets and a skybox at the Verizon Center.
This is not the first time Freddie Mac has hired Covington and Burling. The firm has represented Freddie Mac in around twenty lawsuits charging the company with falsely inflating its stock price from 1999 to 2002. All the suits have been settled. They also represented Freddie Mac when it was charged with making illegal campaign contributions, a matter the company was fined almost $4 million by the Federal Election Commission for.