The federal takeover of Fannie Mae and Freddie Mac includes an edict that they must stop lobbying. The first directives went out from corporate headquarters by e-mail, just after noon Sunday. One of them, obtained by NPR, basically told lobbyists to stay put for now, and watch out what they say.
This could open the final chapter in a great saga of Washington lobbying. Fannie's and Freddie's efforts to advance their interests in Washington have inspired awe, envy — and, in 2005, a whopping fine from the Federal Election Commission.
"The main thing was that they had the resources — I mean the sheer numbers as much as anything," says Mike House, formerly with the industry group FM Policy Focus. (FM Policy Focus was a longtime advocate for stricter oversight for the two government-sponsored enterprises. When Congress finally established that oversight this summer, FM Policy Focus closed down.)
The "resources" referred to by House include more than $174 million spent on lobbying over the past 10 years. That put Fannie and Freddie in the Top 20 for lobbying dollars for the decade, according to the Center for Responsive Politics. That means the mortgage giants were in the same league as such well-known heavy hitters as Verizon, AARP and the U.S. Chamber of Commerce.
House says Fannie's and Freddie's Washington presence had another important element: "They were very strategically focused."
That meant campaign money for many Democrats, and even more Republicans, in the House and Senate. The campaign cash cracked the $10-million mark a while ago.
In 2005, Freddie Mac admitted to the Federal Election Commission that it had set up 85 fundraisers, mainly for members of the House Committee on Financial Services, which oversees government-sponsored enterprises (GSEs), a group of financial services corporations — including Freddie Mac and Fannie Mae — that was created by the United States Congress.
Freddie's head lobbyist at the time called the events "political risk management." Freddie paid a fine of $3.8 million, an FEC record.
"Strategic focus" also extended to hiring. The companies have been famous for hiring big political names. Among them: former Clinton budget director Franklin Raines, Democratic operative Harold Ickes, Republican lobbyist and fundraiser Wayne Berman and former Republican congresswoman Susan Molinari.
And then there's the not-quite-lobbying activity, in which Freddie and Fannie have used grassroots efforts to burnish their reputations. In the housing boom a few years ago, they both had extensive ad campaigns on TV. One ad, over soothing music, told viewers: "All across our country, families are able to find their own path to the American dream, because companies like Fannie Mae and its partners help keep mortgage costs down."
Fannie Mae also set up local partnerships, which had the effect of reinforcing its ties to local leaders and members of Congress.
Minus the lobbyists and the hype, Mike House says Fannie and Freddie's new status should be clarified.
"The Treasury Department — and Fannie and Freddie — will actually speak for themselves now," he says. "There won't be the lobbyists doing this, but it'll be the officers of the company and the Treasury Department."
The administration, however, isn't saying that Fannie and Freddie will stay under government control. That raises the possibility that in a few years, they might be rebuilding their lobbying operations.
But Ann Lee, a professor of finance at Pace University in New York, doesn't think it will be that simple.
"Once the government absorbs this," she says, "it's really hard to off-load it again."
If that proves to be the case, Washington has just seen the abrupt end of two titans of lobbying.