McCain Campaign Manager Took 2 Million From Fannie/Freddie Mac

gifford1967 · Sep 22, 2008

Rick Davis ran a group set up by Fannie/Freddie Mac to shield them from tighter regulations. He manages McCain's campaign. This makes all the yammering about Franklin Raines, that much more of a joke.

Loan Titans Paid McCain Adviser Nearly $2 Million

By DAVID D. KIRKPATRICK and CHARLES DUHIGG

Senator John McCain’s campaign manager was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations, current and former officials say.

Mr. McCain, the Republican candidate for president, has recently begun campaigning as a critic of the two companies and the lobbying army that helped them evade greater regulation as they began buying riskier mortgages with implicit federal backing. He and his Democratic rival, Senator Barack Obama, have donors and advisers who are tied to the companies.

But last week the McCain campaign stepped up a running battle of guilt by association when it began broadcasting commercials trying to link Mr. Obama directly to the government bailout of the mortgage giants this month by charging that he takes advice from Fannie Mae’s former chief executive, Franklin Raines, an assertion both Mr. Raines and the Obama campaign dispute.

Incensed by the advertisements, several current and former executives of the companies came forward to discuss the role that Rick Davis, Mr. McCain’s campaign manager and longtime adviser, played in helping Fannie Mae and Freddie Mac beat back regulatory challenges when he served as president of their advocacy group, the Homeownership Alliance, formed in the summer of 2000. Some who came forward were Democrats, but Republicans, speaking on the condition of anonymity, confirmed their descriptions.

“The value that he brought to the relationship was the closeness to Senator McCain and the possibility that Senator McCain was going to run for president again,” said Robert McCarson, a former spokesman for Fannie Mae, who said that while he worked there from 2000 to 2002, Fannie Mae and Freddie Mac together paid Mr. Davis’s firm $35,000 a month. Mr. Davis “didn’t really do anything,” Mr. McCarson, a Democrat, said.

Mr. Davis’s role with the group has bubbled up as an issue in the campaign, but the extent of his compensation and the details of his role have not been reported previously.

Mr. McCain was never a leading critic or defender of the mortgage giants, although several former executives of the companies said Mr. Davis did draw Mr. McCain to a 2004 awards banquet that the companies’ Homeownership Alliance held in a Senate office building. The organization printed a photograph of Mr. McCain at the event in its 2004 annual report, bolstering its clout and credibility. The event honored several other elected officials, including at least two Democrats, Gov. Edward G. Rendell of Pennsylvania and Representative Artur Davis of Alabama.

In an interview Sunday night with CNBC and The New York Times, Mr. McCain noted that Mr. Davis was no longer working on behalf of the mortgage giants. He said Mr. Davis “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.”

Asked about the reports of Mr. Davis’s role, a spokesman for Mr. McCain said that during the time when Mr. Davis ran the Homeownership Alliance, the senator had backed legislation to increase oversight of the mortgage companies’ accounting and executive compensation. The legislation, however, did not seek to change their anomalous structure as private companies with federal support.

The spokesman, Tucker Bounds, also noted that the Homeownership Alliance included nonprofit organizations like Habitat for Humanity and the Urban League. “It’s not controversial to promote homeownership and minority homeownership,” Mr. Bounds said. More than a half-dozen current and former executives, however, said the Homeownership Alliance was set up mainly to defend Fannie Mae and Freddie Mac by promoting their role in the housing market, and the two companies paid almost the entire cost of the group’s operations.

“They were financed largely, possibly exclusively, by Fannie and Freddie,” said William R. Maloni, a Democrat who is a former head of industry relations for Fannie Mae. “We thought it would be helpful to have someone who was a broadly recognized Republican to be the face of the organization, and that person became Rick Davis.” Mr. Maloni added, “Rick, for that purpose, turned out to be quite good.” (Several executives said Mr. Davis’s compensation was not unusual for the companies’ well-connected consultants.)

The federal bailout of the two mortgage giants has become an emblem of what critics say is the outdated or inadequate regulatory system that allowed the financial system to slide into crisis this summer.

At the time that Fannie Mae and Freddie Mac recruited Mr. Davis to run the Homeownership Alliance in 2000, they were under new pressure from private industry rivals and deregulation-minded Republicans who argued that the two companies’ federal sponsorship gave them an unfair advantage and put taxpayers at risk. Critics of the companies had formed their own Washington-based advocacy group, FM Watch. They were pushing for regulations that would deter the companies from expanding into new areas, including riskier and more profitable mortgages.

Mr. Davis had recently returned to his lobbying firm from running Mr. McCain’s unexpectedly strong 2000 Republican primary campaign, which elevated Mr. McCain’s profile as a legislator and Mr. Davis’s as a lobbyist.

“You can say what you want about free-market distortions, but people like the system because it gets them into houses cheap,” Mr. Davis said to Institutional Investor magazine in 2000, adding that he would run the advocacy group out of his Alexandria, Va., lobbying firm.

The organization also hired Public Strategies, a communications firm that included former Bush adviser Mark McKinnon. Mr. Davis wrote letters and gave speeches for the group. In April 2001, he sent out a press release headlined, “It’s Tax Day — Do You Know Where Your Deductions Are? For Most Americans, They’re in Your Home.”

But by the end of 2005, Fannie Mae and Freddie Mac were recovering from accounting problems and re-examining costs, former executives said. The companies decided the Homeownership Alliance had outlived its usefulness, and it disappeared.

John Harwood contributed reporting.

http://www.nytimes.com/2008/09/22/u...int&adxnnlx=1222093789-IL9tsE+o2bOXGDvrvaD8Kg
Click to expand...

giddyup · Sep 22, 2008

Love your headline... makes it sound like he stole the money!

gifford1967 · Sep 22, 2008

And in the midst of our current disaster, McCain still thinks the deregulation of Wall Street was a good idea. We can't afford another knucklehead president.

<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/vUJ_Qn0AHTU&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><embed src="http://www.youtube.com/v/vUJ_Qn0AHTU&hl=en&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" width="425" height="344"></embed></object>

PELLEY: In 1999, you were one of the Senators who helped pass deregulation of Wall Street. Do you regret that now?

MCCAIN: No. I think the deregulation was probably helpful to the growth of our economy.

gifford1967 · Sep 24, 2008

It's even worse than originally reported. Rick Davis' firm was taking $15,000/month from Freddie Mac up until a month ago.

Freddie’s Friend
Freddie Mac continued checks to McCain campaign chief's firm.

Michael Isikoff
Newsweek Web Exclusive
Sep 23, 2008 | Updated: 7:39 p.m. ET Sep 23, 2008
Since 2006, the federally sponsored mortgage giant Freddie Mac has paid at least $345,000 to the lobbying and consulting firm of John McCain's campaign manager Rick Davis, according to two sources familiar with the arrangement.

Freddie Mac had previously paid an advocacy group run by Davis, called the Homeownership Alliance, $30,000 a month until the end of 2005, when that group was dissolved. That relationship was the subject of a New York Times story Monday, which drew angry denunciations from the McCain campaign. McCain and his aides have vehemently objected to suggestions that Davis has ties to Freddie Mac—an especially sensitive issue given that the Republican presidential candidate has blamed "the lobbyists, politicians and bureaucrats" for the mortgage crisis that recently prompted the Bush administration to take over both Freddie Mac and its companion, Fannie Mae, and put them under federal conservatorship.

But neither the Times story—nor the McCain campaign—revealed that Davis's lobbying firm, Davis Manafort, based in Washington, D.C., continued to receive $15,000 a month from Freddie Mac until last month—long after the Homeownership Alliance had been terminated. The two sources, who requested anonymity discussing sensitive information, told NEWSWEEK that Davis himself approached Freddie Mac in 2006 and asked for a new consulting arrangement that would allow his firm to continue to be paid. The arrangement was approved by Hollis McLoughlin, Freddie Mac's senior vice president for external relations, because "he [Davis] was John McCain's campaign manager and it was felt you couldn't say no," said one of the sources. [McLoughlin did not return phone calls].

When asked about his own campaign manager's associations with the mortgage giants, McCain, in an interview with CNBC Sunday night, said that Davis "has had nothing to do" with the Homeownship Alliance since it disbanded and "I'll be glad to have his record examined by anybody who wants to look at it." (The Homeownership Alliance was set up and funded by both Freddie Mac and Fannie Mae to promote the goal of home ownership and counter efforts to impose tighter regulations on the two federally sponsored entities.)

Davis, in a conference call arranged by the McCain campaign on Monday, said "it's been over three years since there's been any activity in this area and since I had any contact with those folks." Davis also said he "had a severed leave of absence" from his lobbying and consulting firm, and "I've taken no compensation from my firm for 18 months." (A campaign spokesman said that Davis receives no partnership distribution under his arrangement).

It is not unusual for major corporations to enter into consulting retainers so that individuals could be available if needed. And the two sources stressed that Davis at no time made any threats or demands on Freddie Mac. But the sources indicated that Freddie Mac seldom called on Davis or the firm. On one occasion, Davis was asked to attend a meeting of the firm's political action committee during the 2006 campaign in order to give the Republican Party's perspective on the upcoming elections. In addition, Davis did meet with McLoughlin for breakfast on "one or two" occasions. Other than that, one source said, Davis "doesn't do anything" for Freddie Mac. The firm "doesn't even talk to him." In addition, Freddie Mac has had no contact with Davis Manafort other than receiving monthly invoices from the firm and paying them. But the money could be perceived as helping Freddie Mac ensure a good relationship with one of McCain's top aides in the event that he became president. The payments, along with other lobbying and consulting contracts, are expected to be terminated by the new federal overseers, the sources said.

Sharon McHale, the vice president for Freddie Mac, declined any comment on the firm's arrangement with Davis. Other Freddie Mac officials did not return phone calls. Davis did not respond to emails and a phone call seeking comment. Asked for comment, Jill Hazelbaker, the McCain campaign communications director, said: "Rick left Davis Manafort and stopped taking salary from the firm in 2006 and, as Davis Manafort is an entity wholly unrelated to the campaign and any of its employees, all questions about Davis Manafort's practice should be directed to Davis Manafort."

"Who Davis Manafort represents during a period when no employee of the campaign is associated with the firm, is a matter that has nothing to do with this campaign," she added. "Finally, the relationship that Davis Manafort had with Freddie was not a lobbying relationship during Rick's tenure. Rick was never a lobbyist for Freddie."

Davis Manafort also did not return a phone call seeking comment.

McCain has made an issue of the relationship between some of Obama's supporters and Fannie and Freddie. Jim Johnson, the former Fannie Mae chief executive, was initially tapped to help vet potential running mates for the Democratic nominee, until controversy over his appointment forced him to step aside. And McCain's campaign has questioned Obama's ties to Franklin Raines, another Fannie Mae chief executive. Both Johnson and Raines received generous payouts from the mortgage buyer.

URL: http://www.newsweek.com/id/160561
Click to expand...

DonnyMost · Sep 24, 2008

"And things just keep getting worse for John McCain.."

ling ling · Sep 24, 2008

False.

underoverup · Sep 24, 2008

this is becoming a bit of a bombshell and pretty much kills all of mccains' arguments about being above the corruption that caused this mess.

SamFisher · Sep 24, 2008

ling ling said:

False.
Click to expand...

Uh false? THe lede of the article in the Times is that Davis' firm, which he still owns, worked for Fred until last month.

McCain.com's rebuttal is that Davis himself didn't work for Fred recently and that his firm has yet to distribute any profits to him over the last couple of years.

So what? His equity stake (which he still owns) is now presumably more valuable for all the Freddie work - when they pay distributions and dividends is irrelevant. That's like saying "well since Berkshire hathaway Class B doesn't pay dividends, Warren Buffet hasn't profited from Berkshire!" lol....just plain stupid.

But you come up with "False"?

Friend, you can't rebut a proposition by not rebutting it. The firm which Davis owns was working for Freddie until recently - True.

Do I care that much? No - but it just makes them look like morons for their attacks on Obama.

glynch · Sep 24, 2008

underoverup said:

this is becoming a bit of a bombshell and pretty much kills all of mccains' arguments about being above the corruption that caused this mess.
Click to expand...

It is only a bombshell if talked about on the news, along with the latest McCain lies about how he has always been for closer regulation of Fannie Mae and other financial entities.

The only thing good about the real economic crisis is how it has taken news time away from lipstick on a pig and other non-issues.

rhadamanthus · Sep 24, 2008

ling ling said:

False.
Click to expand...

It would appear to me that the above link does NOT directly contradict any of the actual claims made the in the nytimes piece.

Example:

mccain campaign said:

In fact, the allegation is demonstrably false. As has been previously reported, Mr. Davis separated from his consulting firm, Davis Manafort, in 2006. As has been previously reported, Mr. Davis has seen no income from Davis Manafort since 2006. Zero. Mr. Davis has received no salary or compensation since 2006. Mr. Davis has received no profit or partner distributions from that firm on any basis -- weekly, bi-weekly, monthly, bi-monthly, quarterly, semi-annual or annual -- since 2006. Again, zero. Neither has Mr. Davis received any equity in the firm based on profits derived since his financial separation from Davis Manafort in 2006.
Click to expand...

nytimes said:

Mr. Davis took a leave from Davis & Manafortfor the presidential campaign, but as a partner and equity-holder continues to benefit from its income. No one at Davis & Manafort other than Mr. Davis was involved in efforts on Freddie Mac’s behalf, the people familiar with the arrangement said.

A Freddie Mac spokeswoman said the company would not comment.

Jill Hazelbaker, a spokeswoman for the McCain campaign, did not dispute the payments to Mr. Davis’s firm. But she said that Mr. Davis had stopped taking a salary from his firm by the end of 2006 and that his work did not affect Mr. McCain.
Click to expand...

There is no correction there. The article states money was paid to his firm under an arrangement he was quite involved in. Not that he was making 15k/month personally. The article specifically states that he was off the payroll prior to the campaign. As to the equity bit - I am at a loss to explain how he would not have benefited from such an arrangement. Regardless, this tidbit:

nytimes said:

One of the giant mortgage companies at the heart of the credit crisis paid $15,000 a month from the end of 2005 through last month to a firm owned by Senator John McCain’s campaign manager, according to two people with direct knowledge of the arrangement.

The disclosure undercuts a statement by Mr. McCain on Sunday night that the campaign manager, Rick Davis, had 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.
Click to expand...

Is completely ignored, while false outrage is directed as follows:

mccan campaign said:

Further, and missing from the Times' reporting, Mr. Davis has never -- never -- been a lobbyist for either Fannie Mae or Freddie Mac. Mr. Davis has not served as a registered lobbyist since 2005.
Click to expand...

Of course, the idea that the above tidbit was not reported, because it was totally irrelevant is above the campaign's though process.

Note also that:

nytimes said:

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

Is also not addressed by the mccain folks.

Forums

McCain Campaign Manager Took 2 Million From Fannie/Freddie Mac

gifford1967 Member
Supporting Member

giddyup Member

gifford1967 Member
Supporting Member

gifford1967 Member
Supporting Member

DonnyMost Member
Supporting Member

ling ling Member

underoverup Member

SamFisher Member

glynch Member

rhadamanthus Member

Share This Page

About ClutchFans

Rockets Content

Support ClutchFans!

McCain Campaign Manager Took 2 Million From Fannie/Freddie Mac

gifford1967 Member Supporting Member

giddyup Member

gifford1967 Member Supporting Member

gifford1967 Member Supporting Member

DonnyMost Member Supporting Member

ling ling Member

underoverup Member

SamFisher Member

glynch Member

rhadamanthus Member

Share This Page

gifford1967 Member
Supporting Member

gifford1967 Member
Supporting Member

gifford1967 Member
Supporting Member

DonnyMost Member
Supporting Member