Life is an IQ Test--Fannie Mae & Freddie Mac

Economic crisis. The blame game escalates, and the accusations fly fast and furiously. Obama charges that McCain has long been a proponent of deregulation, and deregulation is the principal cause of the current economic crisis. McCain charges that Obama is in the pockets of Fannie Mae and Freddie Mac, and the FMs are principally responsible for the current economic crisis.

McCain and his supporters point out that two years ago, McCain and other members of Congress warned that Fannie Mae and Freddie Mac were out of control and needed to be reigned in, but just couldn’t get anyone to listen. Obama notes that roughly 18 months ago, he wrote a letter to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke warning them of a pending economic crisis involving sub-prime mortgages.

FactCheck.org, PolitiFact.com, and others have already done the fact-checking here, so we won’t go into detail:

McCain and other members of Congress indeed proposed legislation to reign in Fannie Mae and Freddie Mac. But their legislation did not address the issue of subprime mortgages, and McCain subsequently stated that he did not regard subprime mortgages as a problem.
Back in March 2007, Obama wrote to Secretary Paulson and Fed Chairman Bernanke warning of a pending global economic crisis due to predatory lenders making subprime loans. But Obama’s seeming prescience is dampened by the fact that Congress was already conducting hearings dealing with the subprime mortgage issue.

So what’s left? Well, what about Obama and those alleged campaign contributions from Fannie Mae and Freddie Mac? According to the Center for Responsive Politics, Barack Obama has received just over $126,000 in campaign contributions from employees and political action committees of Fannie and Freddie.

Let’s assume something untoward here. How would it work? Well, if Fannie and Freddie decided they wanted something in return for their campaign contributions (e.g., less regulatory pressure), they would have a lobbyist approach Sen. Obama and do a little schmoozing to nudge Obama in a favorable direction. And who lobbies for Fannie Mae and Freddie Mac? That would be Davis & Manafort, a firm hired by the FMs’ advocacy group, the Homeownership Alliance. The Davis in Davis & Manafort is Rick Davis, who happens to be John McCain’s campaign manager.

The problem here is that Mr. Davis, in spite of what seems to be a conflict of interest, and in spite of the McCain campaign’s assurances that Davis severed his ties to the firm years ago, was nevertheless still receiving monthly payments from the firm as recently as last August! (The reported amount of these payments varies from “$15,000 a month from the end of 2005 through [August 2008]” to “more than $30,000 per month for five years.”) Even more damning is the firm’s statement that Davis has been receiving these monthly payments for “doing nothing.”

Hmmmm. So, Fannie and Freddie donated to Barack Obama’s Senate campaign, perhaps in order to receive favors for which John McCain’s campaign manager would have lobbied? In other words, Obama received $126,000 in campaign contributions from Fannie and Freddie, but Rick Davis was on their payroll to the tune of nearly $2 million until just over a month ago? Then who is really in the pockets of Fannie and Freddie?

Politicians sure have trouble with that proverb about living in glass houses and not throwing stones. But then, to paraphrase H. L. Mencken, the Republicans clearly believe they can never go wrong underestimating the intelligence of their conservative base.