DEBORAH AMOS, host:
While homeowners know Fannie Mae and Freddie Mac as the big dogs of the mortgage business, Washington knows them as big players in lobbying. The two corporations staved off government regulation for years, and they did it by lobbying hard and spending generously.
NPR's Peter Overby has more.
PETER OVERBY: Between the two of them, Fannie Mae and Freddie Mac have spent about $3.5 million on lobbying and hired 42 outside firms. That would be just for the first three months of this year.
Take that kind of clout, then add Fannie and Freddie's huge mortgage portfolios reaching into every corner of the country, and it's easy to see why the companies have never lacked for confidence on Capitol Hill.
For example, from February, Fannie Mae's CEO Daniel Mudd testifying to the Senate Banking Committee: given the housing crisis, Mudd said, there should be some flexibility in regulation. He warned against what he called arbitrary limits.
Mr. DANIEL MUDD (CEO, Fannie Mae): Yes indeed, these are tough times, and that is when you want a Fannie Mae around.
OVERBY: In fact, Fannie and Freddie have made it a point always to be around Capitol Hill and around the rest of official Washington too. Former Congressman Jim Leach is an Iowa Republican and an old nemesis of Fannie and Freddie. In Congress, he helped lead the push to rein them in.
Representative JIM LEACH (Republican, Iowa): Well, there have been a lot of rhetorical efforts to tighten regulation, but Fannie and Freddie have both done a pretty deft job of fending that off.
OVERBY: Besides calling it deft, Leach also calls it muscular.
Fannie and Freddie have kept their profiles high because of their odd situation. They're not government agencies, but they're not regular corporations either. As government sponsored enterprises, or GSEs, they're often thought to have guarantees of federal support. It lets them get discounts when they borrow money.
To maintain that advantage and others, they hire well-placed politicos at big salaries. A rival lobbyist once described Fannie Mae as a political organization that happened to be in the mortgage business.
Past executives of Fannie Mae include Democratic operatives and appointees. Former CEO Jim Johnson made news last month when questions about his personal finances forced him out as chief of Barack Obama's vice presidential search team.
It's similar over at Freddie Mac. Former Republican Congresswoman Susan Molinari is a contract lobbyist; Democratic operative Harold Ickes used to be on the board. And the two GSEs are famous for campaign contributions - money going in all directions - to both parties.
Jim Leach, now head of the Kennedy School's Institute of Politics and chairman of the watchdog group Common Cause, says he finds that especially troubling.
Mr. LEACH: They have done an awful lot in terms of the money game that causes the kinds of conflicts of interest that bedevil the American political system.
OVERBY: In the 2006 campaign, Fannie gave almost a million dollars; Freddie over 600,000. In that same election cycle, the nation's biggest lender, Countrywide, gave nearly 250,000.
And the GSEs raise money from others. Five years ago, a Freddie Mac document described an 18-month push by the company's lobbyists. They held more than 75 fundraising events for members of just one House committee - the one that oversees Freddie and Fannie. Freddie Mac later paid the Federal Election Commission a record-setting fine of $3.8 million.
But now the housing crisis has overtaken the old realities. Mike House is director of FM Policy Focus, a lobbying group that's campaigned for years to regulate the GSEs more strictly. Even now House isn't ready to say their influence on Capitol Hill will diminish.
Mr. MIKE HOUSE (FM Policy Focus): They'll have clout because of the role they have. Whether it's more or less, we'll just have to see.
OVERBY: The GSEs are waiting to see as well. Spokesman at Freddie Mac didn't return messages yesterday, and executives at Fannie Mae weren't talking.
Peter Overby, NPR News, Washington.
AMOS: To see a list of politicians who once worked for Fannie Mae and Freddie Mac, go to NPR.org.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.