McCain Campaign Chair on Freddie Mac Payroll Until Last Month

Despite denials from John McCain, The New York Times now reports that connections between his campaign manager and Freddie Mac were more recent than previously reported–continuing until last month. Previous reports indicated that Rick Davis received over $35,000 per month in the past from Fannie Mae and Freddie Mac. Today The New York Times reports:

One of the giant mortgage companies at the heart of the credit crisis paid $15,000 a month to a firm owned by Senator John McCain’s campaign manager from the end of 2005 through last month, according to two people with direct knowledge of the arrangement. The disclosure contradicts a statement Sunday night by Mr. McCain that the campaign manager, Rick Davis, had no involvement with the company for the last several years. Mr. Davis’s firm received the payments from the company, Freddie Mac, until it was taken over by the government this month along with Fannie Mae, the other big mortgage lender whose deteriorating finances helped precipitate the cascading problems on Wall Street, the people said.

They said they did not recall Mr. Davis doing much substantive work for the company in return for the money, other than speak to a political action committee composed of high-ranking employees in October 2006 on the coming midterm congressional elections. They said Mr. Davis’s his firm, Davis & Manafort, was kept on the payroll because of Mr. Davis’s close ties to Mr. McCain, the Republican presidential nominee, who was widely expected by 2006 to run again for the White House…

Between 2000 and the end of 2005, Mr. Davis had received nearly $2 million as president of the coalition, the Homeownership Alliance, which the companies created to help them oppose new regulations and protect their status as federally chartered companies with implicit government backing. That status let them borrow cheaply, helping to fuel rapid growth but also their increased purchases of the risky mortgage securities that were their downfall.

On Sunday, in an interview with CNBC and the New York Times, Mr. McCain responded to a question about Mr. Davis’s role in the advocacy group by saying that his campaign manager “has had nothing to do with it since, and I’ll be glad to have his record examined by anybody who wants to look at it.”

Such assertions, along with McCain campaign television ads tying Mr. Obama to former Fannie Mae chiefs, have riled current and former officials of the two companies and provoked them to volunteer rebuttals of what they see as the McCain campaign’s inaccuracy and hypocrisy. The two officials with direct knowledge of Freddie Mac’s post-2005 contract with Mr. Davis spoke on condition of anonymity. One is a Democrat and the other a registered independent. Four other outside consultants, three Democrats and a Republican also speaking on condition of anonymity, confirmed that it was widely known that Mr. Davis was being paid though his firm.

As president of the Homeownership Alliance, Mr. Davis got $30,000 to $35,000 a month. Mr. Davis, along with Fannie Mae and Freddie Mac, have characterized the alliance as a coalition of many housing industry and consumer groups to promote homeownership, but numerous current and former officials at both companies say the two mortgage companies created and bankrolled the operation to combat efforts by competitors to rein in their business. They dissolved the group at the end of 2005 as part of cost-cutting in the wake of accounting scandals and, at Freddie Mac, a lobbying scandal that forced out its former top Republican lobbyist.

On Monday, the McCain campaign accused The New York Times of bias for reporting the payments to Mr. Davis from the mortgage giants. Mr. Davis said that had worked not for the two companies but for the advocacy group, which included other nonprofit organization as well.

After the Homeownership Alliance was dissolved, Mr. Davis asked to stay on a retainer, the people familiar with the deal said. Hollis McLoughlin, who was chief of staff to Richard F. Syron, Freddie Mac’s chief executive, arranged for a new contract with Davis & Manafort, at the reduced rate of $15,000 a month, they said. Mr. Syron lost his job in the government takeover this month. Mr. McLoughlin, who through a spokeswoman declined to comment, was a former chief of staff to Treasury Secretary Nicholas Brady in the first President Bush’s administration, and has longstanding Republican ties.

An official of Freddie Mac also contradicts recent claims made by John McCain that he has been attempting to increase regulations on Fannie Mae and Freddie Mac:

In an interview Tuesday with conservative talk-radio host Neal Boortz, Mr. McCain said, “I remember warning at that time that Fannie and Freddie were out of control and that they needed to be reined in. And, frankly, I warned that this kind of thing could lead to serious problems. Now, in full disclosure, I didn’t foresee something this huge, but certainly I saw the fundamentals there for serious problems when you have a quasi government agency acting the way they did.”

When Mr. Boortz noted approvingly that Mr. McCain had co-sponsored a Senate bill to mandate new regulations, Mr. McCain said, “I remember it very well.”

But a Freddie Mac official said Mr. McCain “never took on the role that some other Republicans did” to try to limit the companies. He named instead Senators Chuck Hagel of Nebraska, John Sununu of New Hampshire and Elizabeth Dole of North Carolina, all of whom were on the banking committee during recent years. “I remember working against a number of amendments and they were always introduced by Hagel and Sununu. John McCain was never anywhere to be found.”

A check of the records for the legislation that Mr. Boortz mentioned shows that Senator Hagel was the original sponsor on Jan. 26, 2005, and Senators Sununu and Dole were co-sponsors then. Mr. McCain did not sign on as a co-sponsor for more than a year, on May 25, 2006.

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1 Comment

  1. 1
    carolyn says:

    I hate hypocrosy! Why is it that a politician like McCain thinks it is ok to say that he is against special interest groups-all the while he is practically in bed with one?? His cohert-Davis-has taking money to lobby on behalf of the wolves-Freddie Mac. Why isnt more being done?

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