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Gov't may soon back Fannie, Freddie
Friday September 5, 10:06 pm ET
By Alan Zibel, AP Business Writer

Gov't may soon back troubled mortgage finance giants Fannie Mae, Freddie Mac
WASHINGTON (AP) -- Fannie Mae and Freddie Mac are expected to be taken over by the government as soon as this weekend in a bold move designed to protect the mortgage market from the risk the companies could fail, a person briefed on the matter said Friday night.
Some of the details of the intervention, which could cost taxpayers billions, were not yet available, but are expected to include the departure of Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron, according to the source, who asked not to be named because the plan was yet to be announced.

Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and James Lockhart, the companies' chief regulator, met Friday afternoon with the top executives from the mortgage companies and informed them of the government's plan to take over the troubled companies in a process known as conservatorship.

The news, first reported on The Wall Street Journal's Web site, came after stock markets closed. In after-hours trading Fannie Mae's shares plunged $1.70, or 24 percent, to $5.34. Freddie Mac's shares fell 95 cents, or almost 19 percent, to $4.15.

The news also followed a report by the Mortgage Bankers Association that more than 4 million American homeowners with a mortgage, a record 9 percent, were either behind on their payments or in foreclosure at the end of June.

That confirmed what investors saw in Fannie and Freddie's recent financial results: trouble in the mortgage market has shifted to homeowners who had solid credit but took out exotic loans with little or no proof of their income and assets.

Fannie Mae and Freddie Mac, the nation's largest buyers and backers of mortgages, lost a combined $3.1 billion between April and June. Half of their credit losses came from these types of risky loans with ballooning monthly payments.

While both companies say they have enough resources to withstand the losses, many investors believe their financial cushions could wither away as defaults and foreclosures mount.

Still, many in Washington and on Wall Street hadn't expected Treasury Secretary Henry Paulson to intervene unless the companies had trouble issuing debt to fund their operations.

This summer, Congress passed a plan to provide unlimited government loans to Fannie and Freddie and to purchase stock in the two companies if needed.

Critics say the open-ended nature of the rescue package could expose taxpayers to billions of dollars of potential losses.

Supporters, however, argue the Bush administration had little choice but to support Fannie and Freddie, which together hold or guarantee $5 trillion in mortgages -- almost half the nation's total.

Representatives of Fannie and Freddie declined to comment on the government assistance plan.

Treasury spokeswoman Brookly McLaughlin said officials "have been in regular communications" with Fannie and Freddie, but refused to comment on the story saying, "We are not going to comment on rumors."

Treasury recently signed a contract with Morgan Stanley to investigate the financial position of Fannie and Freddie, with help from the Federal Housing Finance Agency, the new regulatory body created by Congress to oversee the mortgage giants.

Asked if an announcement could come soon, McLaughlin said, "We are making progress in the work with Morgan Stanley and FHFA." A spokeswoman for the FHFA also declined to comment.

Concern has been growing that a government rescue of Fannie and Freddie could not only wipe out common stockholders, but also be costly for scores of investment, banking and insurance companies that hold billions of dollars in their preferred shares

The two companies had nearly $36 billion in preferred shares outstanding as of June 30, according to filings with the Securities and Exchange Commission.

Mudd, the son of TV anchor Roger Mudd, was elevated to Fannie Mae's top post in December 2004 when chief executive Franklin Raines and chief financial officer Timothy Howard were swept out of office in an accounting scandal. Syron was named Freddie Mac's CEO in 2003, replacing former chief Gregory Parseghian, who was ousted in after being implicated in accounting irregularities.

He formerly was executive chairman of Thermo Electron Corp., a Waltham, Mass.-based maker of scientific equipment, served head of the American Stock Exchange was president of the Federal Reserve Bank of Boston in the early 1990s.

Fannie Mae was created by the government in 1938, and was turned into a shareholder-owned company 30 years later. Freddie Mac was established in 1970 to provide competition for Fannie.

AP Business Writers Martin Crutsinger and Jeannine Aversa contributed to this report.

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Fannie, Freddie
shares tumble
following report

    WASHINGTON — Shares of mortgage finance companies Fannie Mae and Freddie Mac tumbled in after-hours trading Friday following a report by The Wall Street Journal that the government may soon step in to provide a financial boost to the two companies.
    Details of the plan, which could be announced as early as this weekend, were still being hammered out but are expected to include executive changes at both companies, the Journal said on its Web site.
    The paper also said Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron were expected to step down, and that top executives from both companies met with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson on Friday afternoon.
    The report came after stock markets closed, but in after-hours trading Fannie Mae’s shares plunged $1.70, or 24 percent, to $5.34. Freddie Mac’s shares fell 95 cents, or almost 19 percent, to $4.15.
    Fannie Mae and Freddie Mac, the nation’s largest buyers and backers of mortgages, lost a combined $3.1 billion between April and June. Half of their credit losses came from risky loans with ballooning monthly payments.
    While both companies say they have enough resources to withstand the losses, many investors believe their financial cushions could wither away as defaults and foreclosures mount.

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Home loan giants seized
Conservatorship unprecedented
BY MARTIN CRUTSINGER AND ALAN ZIBEL The Associated Press

    WASHINGTON — The Bush administration’s seizure of troubled mortgage giants Fannie Mae and Freddie Mac is potentially a $200 billion bet that it will help reverse a prolonged housing and credit crisis.
    The historic move announced Sunday won support from both presidential campaigns, but private analysts worried that it may not be enough to stabilize the slumping housing market given the glut of vacant homes for sale, rising foreclosures, rising unemployment and weak consumer confidence.
    Officials announced that both giant institutions were being placed in a government conservatorship, a move that could end up costing taxpayers billions of dollars. Treasury Secretary Henry Paulson said allowing the companies to fail would have extracted a far higher price on consumers by driving up the cost of home loans and all other types of borrowing because the failures would “create great turmoil in our financial markets here at home and around the globe.”
    Mark Zandi, chief economist at Moody’s Economy. com predicted that 30-year mortgage rates, currently averaging 6.35 percent nationwide, could dip to close to 5.5 percent. That’s because investors will be more willing to buy the debt issued by Fannie and Freddie — and at lower rates — since the federal government is now explicitly standing behind that debt.
    “Effectively, the federal government has now become the nation’s mortgage lender,” he said. “This takes a major financial threat off the table.”
    Futures on all major stock indexes rose about 2 percent in electronic trading Sunday night, another sign of investor relief about the takeover plan
    The companies, which together own or guarantee about $5 trillion in home loans, about half the nation’s total, have lost $14 billion in the last year and are likely to pile up billions more in losses until the housing market begins to recover.
    The Treasury Department said it was prepared to put up as much as $100 billion over time in each of the companies if needed to keep them from going broke, in exchange for senior preferred stock. Treasury will immediately be issued $1 billion of such stock from each company, which will pay 10 percent interest. Further purchases of preferred stock will be triggered if quarterly audits find that the companies’ capital cushion is below prudent standards.
    The government, which will receive warrants representing ownership stakes of 79.9 percent in each company, is hoping that its moves will reassure nervous investors that they can continue to buy the debt of the two companies.
    In a statement, President Bush said: “Americans should be confi - dent that the actions taken today will strengthen our ability to weather the housing correction and are critical to returning the economy to stronger sustained growth.”
    Democratic presidential nominee Barack Obama issued a statement agreeing that some form of intervention was necessary, and said: “I will be reviewing the details of the Treasury plan and monitoring its impact to determine whether it achieves the key benchmarks I believe are necessary to address this crisis.”
    Republican presidential nominee John McCain also voiced support while his running mate, Alaska Gov. Sarah Palin, said that Fannie Mae and Freddie Mac “have gotten too big and too expensive to the taxpayers. The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help.”
    The conservatorship will be run by the Federal Housing Finance Agency, the new agency created by Congress this summer to regulate Fannie Mae and Freddie Mac, a move taken at the same time that Congress greatly expanded the power of the Treasury Department to make loans to the two companies and purchase their stock.
    The executives and board of directors of both institutions are being replaced. Herb Allison, the former head of the TIAA-CREF retirement investment fund, was selected to head Fannie Mae, and David Moffett, a former vice chairman of US Bancorp, was picked to head Freddie Mac.
    Paulson was careful not to blame Daniel Mudd, the outgoing CEO of Fannie Mae, or Freddie Mac’s departing CEO Richard Syron for the companies’ current problems. While both men are being removed as the top executives, they have been asked to remain for an unspecified period to help with the transition.
    Fannie Mae and Freddie Mac both purchase home loans from banks and then repackage those loans as mortgage-backed securities that they either hold on their own books or sell to investors around the globe. This process provides banks with more money to make more home loans, greatly expanding home ownership.

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Mortgage crisis has Washington putting aside free-market ideology
By Nelson D. Schwartz
Sunday, September 7, 2008

Despite decades of free-market rhetoric from Republican and Democratic lawmakers, Washington has a long history of providing financial help to the private sector when the economic or political risk of a corporate collapse appeared too high.

The effort to save Fannie Mae and Freddie Mac is only the latest in a series of financial maneuvers by the government that stretch back to the rescue of the military contractor Lockheed Aircraft and the Penn Central Railroad under President Richard Nixon, the shoring up of Chrysler in the waning days of the Carter administration and the salvage of the U.S. savings and loan system in the late 1980s.

More recently, after airplanes were grounded because of the terrorist attacks of Sept. 11, 2001, Congress approved $15 billion in subsidies and loan guarantees to the faltering airlines.

Now, with the U.S. government preparing to save Fannie and Freddie only six months after the Federal Reserve Board orchestrated the rescue of Bear Stearns, it appears that the mortgage crisis has forced the government to once again shove ideology aside and get into the bailout business.

"If anybody thought we had a pure free-market financial system, they should think again," said Robert Bruner, dean of the Darden School of Business at the University of Virginia.

The closest historical analogy to the Fannie-Freddie crisis is the rescue of the Farm Credit and savings and loan systems in the late 1980s, said Bert Ely, a banking consultant who has been a longtime critic of the mortgage finance companies.

The savings and loan bailout followed years of high interest rates and risky lending practices and ultimately cost taxpayers roughly $124 billion, with the banking industry kicking in another $30 billion, Ely said.

Even if the rescue of Fannie and Freddie ends up costing tens of billions of dollars, the savings and loan collapse is still likely to remain the costliest government bailout to date, said Lawrence White, a professor of economics at the Stern School of Business at New York University.

"The S.& L. debacle cost upwards of $100 billion, and the economy is more than twice the size today than it was in the late 1980s," he said. "I don't think this will turn out to be as serious as that, when over 2,000 banks and thrifts failed between the mid-1980s and mid-1990s."

Most of those losses were caused by the shortfall between what the government paid depositors and what it received by selling the troubled real estate portfolios it acquired after taking over the failed thrifts.

In the Chrysler case, Carter and lawmakers in states with auto plants helped push through a package of $1.5 billion in loan guarantees for the troubled carmaker, while also demanding concessions from labor unions and lenders.

While Chrysler is remembered as a major bailout, White says it was minor compared with the savings and loan crisis or the current effort to shore up Fannie and Freddie.

The government did not have to give money directly to Chrysler, and it actually earned a profit on the deal because of stock warrants it received when the loan guarantees were provided. At the time, Chrysler had a work force of more than 100,000 people.

Still, Ely makes a distinction between the rescue of Fannie and Freddie and the thrifts versus the aid packages for Chrysler and other industrial companies. "They didn't have a federal nexus," he said. "They weren't creatures of the federal government."

This effort is also different from the others because of the potential fallout for the broader economy and especially the beleaguered housing sector if it does not succeed.

Unlike a particular auto company or even a major bank like Continental Illinois National Bank and Trust, which was bailed out in 1984, "we depend on Fannie and Freddie for funding almost half of our mortgage market," said Thomas Stanton, an expert on the two companies who also teaches at Johns Hopkins University.

"The government," he added, "has many less degrees of freedom in dealing with these companies than in the earlier bailouts."

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What Are the Origins of Freddie Mac and Fannie Mae?

By Rob Alford

Mr. Alford is a student at the University of Washington and an HNN intern.

In recent months, the nation's two largest mortgage finance lenders have come under increasing scrutiny at the hands of Congress, the Justice Department and the Securities and Exchange Commission (SEC). The Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac, have operated since 1968 as government sponsored enterprises (GSEs). This means that, although the two companies are privately owned and operated by shareholders, they are protected financially by the support of the Federal Government. These government protections include access to a line of credit through the U.S. Treasury, exemption from state and local income taxes and exemption from SEC oversight. A recent accounting scandal at Freddie Mac that resulted in the replacement of three of the company's top executives has led to mounting concerns over the privileged status these GSEs enjoy in the marketplace.

Fannie Mae was created in 1938 as part of Franklin Delano Roosevelt's New Deal. The collapse of the national housing market in the wake of the Great Depression discouraged private lenders from investing in home loans. Fannie Mae was established in order to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing.

Initially, Fannie Mae operated like a national savings and loan, allowing local banks to charge low interest rates on mortgages for the benefit of the home buyer. This lead to the development of what is now known as the secondary mortgage market. Within the secondary mortgage market, companies such as Fannie Mae are able to borrow money from foreign investors at low interest rates because of the financial support that they receive from the U.S. Government. It is this ability to borrow at low rates that allows Fannie Mae to provide fixed interest rate mortgages with low down payments to home buyers. Fannie Mae makes a profit from the difference between the interest rates homeowners pay and foreign lenders charge.

For the first thirty years following its inception, Fannie Mae held a veritable monopoly over the secondary mortgage market. In 1968, due to fiscal pressures created by the Vietnam War, Lyndon B. Johnson privatized Fannie Mae in order to remove it from the national budget. At this point, Fannie Mae began operating as a GSE, generating profits for stock holders while enjoying the benefits of exemption from taxation and oversight as well as implied government backing. In order to prevent any further monopolization of the market, a second GSE known as Freddie Mac was created in 1970. Currently, Fannie Mae and Freddie Mac control about 90 percent of the nation's secondary mortgage market.

GSEs such as Fannie Mae and Freddie Mae, with their combination of private enterprise and public backing have experienced a period of unprecedented financial growth over the past few decades. The current assets of these two companies combine for a total that is 45 percent greater than that of the nation's largest bank.



On the other hand, their combined debt is equal to 46 percent of the current national debt. It is this combination of rapid growth and over leveraging that has lead to the current concerns of Congress, the Justice Department and the SEC with regards to the financial practices of these GSEs.

Fannie Mae and Freddie Mac are the only two Fortune 500 companies that are not required to inform the public about any financial difficulties that they may be having. In the event that there was some sort of financial collapse within either of these companies, U.S. taxpayers could be held responsible for hundreds of billions of dollars in outstanding debts. A recent investigation by the Justice Department and the SEC into the accounting practices at Freddie Mac revealed accounting errors in the amount of 4.5 to 4.7 billion dollars and resulted in the termination of three of the company's top executives. Ongoing investigations by Congress, particular the House Finance Services subcommittee that oversees the activity of GSEs, will determine the future role of Fannie Mae and Freddie Mac and the secondary mortgage market that they dominate.

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In 1968, due to fiscal pressures created by the Vietnam War, Lyndon B. Johnson privatized Fannie Mae in order to remove it from the national budget.

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Barney Frank Hit Over Boyfriend’s Fannie Mae Role

Critics are crying “conflict of interest” over Democratic Rep. Barney Frank’s live-in relationship with Fannie Mae executive Herb Moses while Frank was on the House Banking Committee.
Moses was Fannie Mae’s assistant director for product initiatives from 1991 to 1998.
He was also openly gay Frank’s live-in boyfriend during that time, while the Massachusetts lawmaker was on the committee that had jurisdiction over government-sponsored Fannie Mae, Fox News’ Bill Sammon reported.
Now that Fannie Mae is at the center of the recent financial meltdown, the relationship is coming under increased scrutiny.
“It’s absolutely a conflict,” said Dan Gainor, vice president of the Business & Media Institute.
“He was voting on Fannie Mae at a time when he was involved with a Fannie Mae executive. How is that not germane?
“But everyone wants to avoid it because he’s gay. It’s the quintessential double standard.”
A top Republican House aide told Fox News: “He writes housing and banking laws and his boyfriend is a top exec at a firm that stands to gain from those laws? No media ever take note?”
Frank and Moses met in 1987 and lived together in Washington, D.C., until they split up in 1998.
National Mortgage News disclosed that Moses “helped develop many of Fannie Mae’s affordable housing and home improvement lending programs.”
Critics charge that such programs led to the mortgage meltdown and the recent government takeover of Fannie Mae, according to Fox News, which noted that Fannie Mae and its financial cousin Freddie Mac “are blamed for spreading bad mortgages throughout the private financial sector.”
In 1994, Frank thwarted efforts by President Clinton’s Department of Housing and Urban Development to impose new regulations on Fannie Mae.

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Freddie Mac paid to kill reform bill
Legislation was sponsored by GOP senator Hagel
BY PETE YOST The Associated Press

    WASHINGTON — Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.
    In the cross hairs of the campaign carried out by DCI of Washington were Republican senators and a regulatory overhaul bill sponsored by Sen. Chuck Hagel, R-Neb. DCI’s chief executive is Doug Goodyear, whom John McCain’s campaign later hired to manage the GOP convention in September.
    Freddie Mac’s payments to DCI began shortly after the Senate Banking, Housing and Urban Affairs Committee sent Hagel’s bill to the then GOP-run Senate on July 28, 2005. All GOP members of the committee supported it; all Democrats opposed it.
    In the midst of DCI’s yearlong effort, Hagel and 25 other Republican senators pleaded unsuccessfully with Senate Majority Leader Bill Frist, R-Tenn., to allow a vote.
    “If effective regulatory reform legislation … is not enacted this year, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole,” the senators wrote in a letter that proved prescient.
    Unknown to the senators, DCI was undermining support for the bill in a campaign targeting 17 Republican senators in 13 states, according to documents obtained by The Associated Press. The states and the senators targeted changed over time, but always stayed on the Republican side.
    In the end, there was not enough Republican support for Hagel’s bill to warrant bringing it up for a vote because Democrats also opposed it and the votes of some would be needed for passage. The measure died at the end of the 109th Congress.
    McCain, R-Ariz., was not a target of the DCI campaign. He signed Hagel’s letter and three weeks later signed on as a co-sponsor of the bill.
    By the time McCain did so, however, DCI’s effort had gone on for nine months and was on its way toward killing the bill.
    In recent days, McCain has said Freddie Mac and Fannie Mae were “one of the real catalysts, really the match that lit this fire” of the global credit crisis. McCain has accused Democratic presidential candidate Barack Obama of taking advice from former executives of Fannie Mae and Freddie Mac, and failing to see that the companies were heading for a meltdown.
    McCain’s campaign manager, Rick Davis, or his lobbying firm has taken more than $2 million from Fannie Mae and Freddie Mac dating to 2000. In December, Freddie Mac contributed $250,000 to last month’s GOP convention.
    Obama has received $120,349 in political donations from employees of Freddie Mac and Fannie Mae; McCain $21,550.
    The Republican senators targeted by DCI began hearing from prominent constituents and financial contributors, all urging the defeat of Hagel’s bill because it might harm the housing boom. The effort generated newspaper articles and radio and TV appearances by participants who spoke out against the measure.
‘STEALTH LOBBYING’
    Inside Freddie Mac headquarters in 2005, the few dozen people who knew what DCI was doing referred to the initiative as “the stealth lobbying campaign,” according to three people familiar with the drive.
    They spoke only on condition of anonymity, saying they fear retaliation if their names were disclosed.
    Freddie Mac executive Hollis McLoughlin oversaw DCI’s drive, according to the three people.
    “Hollis’s goal was not to have any Freddie Mac fingerprints on this project and DCI became the hidden hand behind the effort,” one of the three people told the AP.
    Before 2004, Fannie Mae and Freddie Mac were Democratic strongholds. After 2004, Republicans ran their political operations. McLoughlin, who joined Freddie Mac in 2004 as chief of staff, has given $32,250 to Republican candidates over the years, including $2,800 to McCain, and has given none to Democrats, according to the Center for Responsive Politics, a nonpartisan group that tracks money in politics.
    On Friday night, Hagel’s chief of staff, Mike Buttry, said Hagel’s legislation “was the last best chance to bring greater oversight and tighter regulation to Freddie and Fannie, and they used every means they could to defeat Sen. Hagel’s legislation every step of the way.”
    “It is outrageous that a congressionally chartered governmentsponsored enterprise would lobby against a member of Congress’s bill that would strengthen the regulation and oversight of that institution,” Buttry said in a statement. “America has paid an extremely high price for the reckless, and possibly criminal, actions of the leadership at Freddie and Fannie.”
9 DIDN’T SIGN
    Nine of the 17 targeted Republican senators did not sign Hagel’s letter: Sens. Mitch McConnell of Kentucky, Christopher “Kit” Bond and Jim Talent of Missouri, Conrad Burns of Montana, Mike DeWine of Ohio, Lamar Alexander of Tennessee, Olympia Snowe of Maine, Lincoln Chafee of Rhode Island and George Allen of Virginia. Aside from the nine, 20 other Republican senators did not sign Hagel’s letter.
    McConnell’s office said members of leadership do not sign letters to the leader. McConnell was majority whip at the time.
    Eight of the targeted senators did sign it: Sens. Rick Santorum of Pennsylvania, Mike Crapo of Idaho, Jim Bunning of Kentucky, Larry Craig of Idaho, John Ensign of Nevada, Lindsey Graham of South Carolina, George Voinovich of Ohio and David Vitter of Louisiana. Santorum, Crapo and Bunning were on the Senate Banking, Housing and Urban Affairs Committee and had voted in favor of sending the bill to the full Senate.
    On Thursday, Freddie Mac acknowledged that the company “did retain DCI to provide public affairs support at the state and local level.” On Friday, DCI issued a four-sentence statement saying it complied with all applicable federal and state laws and regulations in representing Freddie Mac. Neither Freddie Mac nor DCI would say how much Goodyear’s consulting firm was paid.
    Freddie Mac paid DCI $10,000 a month for each of the targeted states, so the more states, the more money for DCI, according to the three people familiar with the program. In addition, Freddie Mac paid DCI a group retainer of $40,000 a month plus $20,000 a month for each regional manager handling the project, the three people said.
    Last month, the concerns of the 26 Republican senators who signed Hagel’s bill became a reality when the government seized control of Freddie Mac and Fannie Mae amid their near financial collapse. Federal prosecutors are investigating accounting, disclosure and corporate governance issues at both companies, which own or guarantee more than $5 trillion in mortgages, roughly equivalent to half of the national debt.
    Freddie Mac was so pleased with DCI’s work that it retained the firm for other jobs, finally cutting DCI loose last month after the government takeover, according to the three people familiar with the situation.
    Freddie Mac’s problems began when Hagel’s legislation won approval from the Senate committee.
DEMOCRATS AGAINST BILL
    Democrats did not like the harshest provision, which would have given a new regulator a mandate to shrink Freddie Mac and Fannie Mae by forcing them to sell off part of their portfolios. That approach, the Democrats feared, would cut into the ability of low- and moderateincome families to buy houses.
    The political backdrop to the debate “was like bizarre-o-world,” said the second of three people familiar with the program. “The Republicans were pro-regulation and the Democrats were against it; it was upside down.”
    Sen. Richard Shelby, the committee chairman at the time, underscored that in a statement Wednesday, saying that with Democrats already on their side, it was not surprising that Freddie Mac and Fannie Mae went after Republicans. “Unfortunately,” said Shelby, RAla., “efforts then to derail reform were successful.”
    In a sign of bad things to come, Freddie Mac was already having serious problems in 2005. Auditors had exposed massive accounting issues, so improved regulation was one obvious remedy.
    Once Freddie Mac’s in-house lobbyists failed to keep Hagel’s bill bottled up in the committee, McLoughlin responded by secretly hiring DCI.
    DCI never filed lobbying reports with Congress about what it was doing because the firm was relying on a long-recognized gap in the disclosure law.
    Federal lobbying law only requires reporting and registration when there are contacts with a legislator or staff.
    “To have it stealthy, not to let people know who is behind this, in my opinion is unethical,” said James Thurber, director of the Center for Congressional and Presidential Studies at American University who long has taught courses about lobbying.
    Goodyear is a longtime political consultant from Arizona who resigned from the Republican convention job this year after Newsweek magazine revealed he had lobbied for the repressive military junta of Myanmar.
    McLoughlin, Freddie Mac’s senior vice president for external relations, was assistant treasury secretary from 1989 through 1992 in the administration of President Bush’s father.

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WASHINGTON — Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.