Monday, February 23, 2009

Freddie Mac Will Investigate Self over Lobbying

Oh I just can't wait to read this report! This is like the SEC allowing Bernie Madoff to supply records for his own investigation.
Freddie Mac board chairman John Koskinen confirmed for the AP that an inquiry is under way but declined to comment further. Anthony did not return phone calls and e-mails seeking comment. Corinne Russell, spokeswoman for the federal office that regulates Freddie Mac, declined to comment.

The inquiry inside Freddie Mac follows stories by the AP about the company secretly hiring Republican consulting firm DCI Group of Washington to stop a proposal in the Senate in 2005 sponsored by Sen. Chuck Hagel, R-Neb. The legislation would have forced Freddie Mac and Fannie Mae to sell hundreds of billions of dollars worth of assets from their portfolios of mortgages and mortgage-backed securities. At the time, the portfolios were highly lucrative but their value plunged when the housing market collapsed. (Yahoo)

Along with the above, the article points out some other tasty tidbits about Freddie Mac
  • An accounting of six-figure payments to 52 outside lobbying firms and political consultants in 2006, including details about what work, if any, the consultants performed for the money paid to their firms.

  • An accounting of personal use by Freddie Mac executives of company-paid tickets and a company-leased skybox at the Verizon Center. Freddie Mac executive Hollis McLoughlin, who oversaw the $2 million campaign by DCI, was photographed by the AP in Freddie Mac's leased skybox four months ago at the season home opener of the Washington Capitals hockey team.

  • Forced to pay a $3.8 million fine in 2006 for illegal campaign donations

  • Settled roughly 20 lawsuits alleging the company fraudulently inflated the price of its stock from 1999-2002.
If there is proof they were inflating their stock prices as early as 1999, I'd bet they were doing this long before then. Even so, why wasn't someone watching these guys closer? I guess that what happens when you let the fox watch the hen house!

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