Top executives of financial services giants that belong to the lobbying group FM Watch met with key policymakers in Washington Wednesday to press for tighter regulation of the government-sponsored enterprises Fannie Mae and Freddie Mac.
A spokeswoman for the lobbying group said that the executives' itinerary included meetings with Federal Reserve Chairman Alan Greenspan; Treasury Secretary Lawrence Summers; Senate Banking Chairman Phil Gramm, R-Tex.; Rep. Richard Baker, R-La., the sponsor of a bill to overhaul regulation of the GSEs; Rep. John J. LaFalce, D-N.Y., ranking Democrat on the House Banking Committee; and Sen. Harry Reid, D-Nev.
William B. Harrison Jr., president and chief executive of Chase Manhattan Corp.; James E. Rohr, president and CEO of PNC Financial Services Group; William F. Aldinger, chairman of Household International Inc.; Maurice R. Greenberg, chairman of American International Group; and Michael A. Neal, president and chief operating officer of GE Capital Services attended the meetings.
All are members of FM Watch's board, except for Mr. Neal, who was representing GE Capital in lieu of its chairman, Dennis Dammerman. Wells Fargo & Co. was not represented Wednesday, though its chairman, Richard Kovacevich, is on FM Watch's board, the spokeswoman said.
Gerald Friedman, FM Watch's chairman, and Mike House, its chief lobbyist, accompanied the executives. FM Watch spokeswoman Beneva Schulte would not go into specifics about what the delegation would propose. "They're going to [these meetings] to say that there's a problem," she said.
FM Watch was formed last year to fight expansion by Fannie and Freddie outside of their main role of buying mortgages from lenders in the secondary market. The group's members fear that the two will use their government-conferred edge to compete unfairly in other financial services, such as mortgage insurance or home equity loans.
The group initially billed itself as a coalition of other trade groups. But last September FM Watch announced that its board consisted of heavyweights like Mr. Harrison of Chase, Mr. Kovacevich of Wells Fargo, and Mr. Dammerman of GE Capital.
That move that was interpreted as a bit of saber-rattling to prove that the group was more than just a lobby for mortgage insurers, as Fannie and Freddie had depicted it up to that point. Wednesday's tour of Washington was the first reported time that board members have acted overtly as part of FM Watch.
David Jeffers, a spokesman for Fannie, dismissed the executives' Washington tour as an act of desperation. "The people who are being lobbied so heavily by [FM Watch] have started to say, 'What are you recommending?' And they don't seem to have an answer for that. Because the honest answer would be that they want to hobble Fannie Mae, and that wouldn't go over terribly well with Congress, given the fact that we're doing what Congress set us up to do."
FM Watch has not endorsed Rep. Baker's bill, which, among other things, would sever the GSEs' lines of credit with the Treasury. Ms. Schulte said the group does not support "privatization" of the GSEs, just containment, more competition, and a level playing field.