In Broad Daylight: The Banks Bought Congress


Budgeting political risk helped Fannie Mae, Freddie Mac, and financial services companies avoid the kind of scrutiny they needed from Congress for the past several years. Millions of dollars in private travel, campaign contributions, and lobbyists-galore created a border wall that no regulation or reform could climb over. Florida Rep. Tim Mahoney’s hole gets deeper as a 2nd affair is revealed, the FBI opens and investigation, and the Democrats ditch him. There’s more in this round-up of today’s news:

Dave Jamieson at The New Republic looks into the lavish treatment members and staffers of the House Financial Services Committee received from Fannie Mae, Freddie Mac, and financial services companies in the years preceeding the collapse of the industry. Former chairman Mike Oxley, who now works for NASDAQ and as a lobbyist, approved a half-million dollars worth of privately paid travel, much of it offered by financial services companies. Fannie Mae and Freddie Mac had approximately one lobbyist for each member of the 70 person committee. Campaign contributions were spread around like butter on cornbread. Of course, all of this largesse eventually lured numerous staffers and committee members into the private sector and Jamieson names names:

Former Oxley adviser Carter McDowell moved on to the American Bankers Association; Karen Lynch Calton, one-time counsel to the committee, has lobbied for the Consumer Bankers Association; Greg Zerzan, an aide to Oxley, eventually went to the International Swaps and Derivatives Association; Linda Dallas Rich, a committee adviser, headed to the New York Stock Exchange; longtime Oxley aide Clinton Jones hopped to Fannie for a spell, before returning to Congress to serve Bachus on the finance committee; and even though Baker had been a perennial foe to the GSEs, the congressman’s own former chief of staff, Duane Duncan, became a star on Fannie’s lobbying team.

Rep. Tim Mahoney is in a load more trouble after the Associated Press revealed another affair and ABC News, the team that broke this story, reported that the FBI is investigating the allegations of hush money paid to the first reported mistress. It is alleged that Mahoney hired Patricia Allen, the first reported mistress, to both his campaign and congressional staffs. After things went sour (she discovered he was having another affair) Mahoney fired her and allegedly paid her $121,000 to keep her from filing a wrongful termination lawsuit. Speaker Nancy Pelosi called for an ethics committee investigation (although those haven’t really led to anything since, I don’t know, the 1990s) and House Democrats effectively abandoned the freshman Florida congressman to fend for himself in a difficult district.

The defense team in Sen. Ted Stevens’ trial for filing false statements on his personal financial disclosure forms is attempting to show that the home renovations at the center of the charges were done for VECO’s Bill Allen and not for Stevens. Stevens’ daughter, Susan Stevens Covich, testified that when she appeared at her father’s Girdwood, Alaska home to spend time while visiting Allen was present in numerous other people, often taking up all five available bedrooms leaving her to sleep on the couch. Covich said she stopped staying there after Allen’s constant presence became “creepy“. Previously, defense attorneys have shown that Stevens spends most of his time living in Washington, DC and not at the home in Girdwood. The judge presiding over the case stated that the case will likely be handed to the jury next week.