FEC Fines Freddie Mac $3.8M

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The Federal Election Commission has fined Freddie Mac a record $3.8 million for an illegal campaign financing scheme that helped raise millions of dollars for congressional allies. The secondary mortgage giant used corporate resources between 2000 and 2003 to sponsor 85 congressional fundraisers its chief lobbyist described as "political risk management" that raised at least $1.7 million for federal candidates, the FEC said.

The fundraisers were organized by Mitchell Delk, Freddie's then-chief lobbyist, and former Vice President Clark Camper, and were held at Washington's Galileo restaurant. They mostly benefited members of the House Financial Services Committee, which has key jurisdiction over legislative issues relating to Freddie Mac, including the ongoing efforts to reform the secondary mortgage market. In addition, Freddie Mac executives used corporate staff and resources to solicit and forward, or "bundle," contributions from company employees to federal candidates, in violation of federal law. Freddie also contributed $150,000 to the Republican Governor's Association in 2002, which the RGA later returned.

As a government sponsored enterprise Freddie Mac is prohibited from making any direct campaign contributions, but may do so through a political action committee, and FEC regulations bar a corporation from facilitating or acting as a conduit for campaign contributions. Freddie and its sister secondary market giant, Fannie Mae, have been engaged in a massive lobbying effort the past five years to defeat or limit any potential reform to the secondary market proposed by Congress.

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