The Obama administration and congressional lawmakers are headed for a major debate in 2010 over how to restructure both home loan giants, which almost collapsed last year under the weight of poor investments in the housing markets. Now under government control, the lenders have since received hundreds of billions of dollars in bailout support.
Many of the same lobbyists in the alliance were leaders in the earlier “FM Policy Focus” organization that disbanded last July when Congress passed restrictions on the giant home lenders, which operated as so-called government-sponsored enterprises. Critics of the lenders said their implicit government backing led to risky lending practices that occasioned their near-failure.
Mike House, a lobbyist at Hogan & Hartson, said the alliance is in the “very early formative stages” and aims to be involved in the debate over Fannie, Freddie and the Federal Home Loan Banks, another major part of the housing market. The former participants of FM Policy Focus discussed forming a new organization this summer as lawmakers and the Obama administration began discussing the future of the home loan industry.
“This is not a recreation of the old FM Policy Focus,” House said. “This is a new organization with a much smaller structure … We don’t see our profile the same as the old FM Policy Focus.”
Congress is in the middle of a debate on a series of new financial regulations, but the Obama administration and congressional Democrats have put off deciding what to do with the home loan giants until next year.
Republicans are already criticizing Democrats for not including the future of Fannie and Freddie in the current regulatory debate.
Hogan and Hartson, BGR Holdings and Akin Gump registered to lobby for the alliance, which spent $120,000 in the third quarter of 2009, according to federal lobbying records. At BGR, Dan Murphy, a former official at the Housing and Urban Development agency, and Lanny Griffith, an aide under President George H.W. Bush, have registered to lobby for the alliance.
In addition, the Mortgage Insurance Companies of America (MICA) trade association is affiliated with the new group, according to the records. The insurance association represents firms such as Genworth Mortgage Insurance Corp. and Mortgage Guaranty Insurance Corp. MICA played a role in the earlier FM group, which spent millions of dollars lobbying between 1999 and 2008.
Fannie Mae and Freddie Mac spent more than a combined $150 million on lobbying in the same period.
“This is not an anti-GSE coalition,” House said of the new alliance. “We just felt like there was — not a vacuum — but that we needed to be involved and have our voices heard.”
The coalition does not have a firm position yet on how the firms should be restructured, and does not even have a spokesman. Former Republican Rep. J.C. Watts (Okla.) was involved in the earlier organization, but House said Watts is not involved with the new alliance at the moment.