When it came to buying influence in Washington, Freddie Mac and Fannie Mae were among Corporate America's biggest spenders.
The two mortgage giants paid $174 million to lobbyists over the past ten years to ensure the political climate would remain friendly to growing the mortgage business - even as the housing bubble began showing signs of bursting, according to a report by the Center for Responsive Politics, a watchdog group.
"They tied up almost every lobbying firm in Washington, whether they used them or not, over the past several years," said Joshua Rosner, a financial analyst with Graham Fisher & Co. and long-time critic of both companies.
Freddie Mac (FRE, Fortune 500) spent over $94.8-million on lobbyists since 1998, making it the nation's 12th-largest lobbying client, while Fannie Mae (FNM, Fortune 500) bought $79.5-million of influence, the 20th biggest spender, according to the Center for Responsive Politics.
"They wanted to fend off regulation of their enterprises," said Massie Ritsch of the Center.
Until recent months, Fannie Mae and Freddie Mac largely succeeded in that effort - functioning with relatively little oversight as they aggressively grew their portfolio of mortgages to try to increase earnings.
Campaign contributions bought influence as well, including donations to the presidential candidates.
Sen. Barack Obama is the No. 3 recipient of Fannie and Freddie campaign dollars, having collected $123,000 from the companies since he first ran for the Senate in 2004, according to the Federal Election Commission and the Center for Responsive Politics.
The former chief executive of Fannie Mae, James Johnson, was the original head of Obama's vice presidential search team. Johnson resigned from Obama's campaign amid controversy over discounted home loans he had received.
Sen. John McCain has received $19,000 from the two companies in the past ten years.
His campaign manager, Rick Davis, formerly led the Homeownership Alliance, an advocacy group for Fannie Mae and Freddie Mac's mortgage businesses.
"We had the Keating Five," said Rosner, referring to McCain and four other senators who had supported the head of the failed Lincoln Savings and Loan Association nearly 20 years ago.
"This is closer to the Keating 535," added Rosner referring to all members of Congress. "Those legislators who have cost shareholders, preferred shareholders and taxpayers potentially hundreds of billions of dollars, I think we ought to hold them accountable."
Regulators, in taking over Fannie Mae and Freddie Mac, are suspending the companies' efforts to buy influence.
"All political activities, including all lobbying, will be halted immediately," said James Lockhart, head of the new Federal Housing Finance Agency that will oversee the companies.
While Fannie and Freddie are now in a government conservatorship, it will remain for Congress to decide the companies' ultimate fate.
One of the few critics of Fannie and Freddie, Sen. Jim DeMint, R-S.C., called Monday for the mortgage companies to be restructured and lose their government backing.
"For years, these two mortgage giants have used taxpayer guarantees to gain enormous profits and lobby Congress to look the other way while they failed homeowners," said DeMint.
"These mortgage giants must be broken up and forced to survive in the marketplace without taxpayer guarantees," he added. "Allowing them to survive into the future with explicit government backing will only bring more harm to American homeowners and greater debt to American taxpayers."
