Matt Yglesias

McCain Tapped Freddie Lobbyist as Chief of Staff

John McCain likes to talk about how, years ago, he spoke out about potential problems with Fannie Mae and Freddie Mac. But how is it that as these issues grew more urgent, we didn’t hear much of anything about this from him until, grasping at straws amidst a crisis, he decided to use Fannie and Freddie as a political attack? Well, The Washington Post’s Matthew Mosk and David S. Hilzenrath know what’s what:

When mortgage giant Freddie Mac feared several years ago that Sen. John McCain was too outspoken on the issue of executive pay, it pinpointed a lobbyist known for his closeness to McCain and hired him to work with the senator. Mark Buse, a longtime McCain adviser who had been staff director of the Senate commerce committee, signed on as a Freddie Mac lobbyist, and his firm, ML Strategies, earned $460,000 in lobbying fees in late 2003 and 2004, according to lobbying disclosures. Buse is now chief of staff at McCain’s Senate office.

Typically with this sort of story the most you can get is a kind of guilt by association. But in this case, Buse was hired by Freddie Mac specifically in order to influence McCain. Of course since McCain is an honorable man above the influence of influence-peddlers (did you know he was in Vietnam?) it’s fine for him to do this sort of thing. But if it were someone else, this would be corrupting.

The Takeover

Looks like the government is taking Fannie and Freddie into receivorship: “The executives were told that, under the plan, they and their boards would be replaced, shareholders would be virtually wiped out, but the companies would be able to continue functioning with the government generally standing behind their debt, people briefed on the discussions said.”

Not sure I understand the logical behind “virtually” wiping out the shareholders as opposed to totally wiping them out. As per this Economist article the sensible thing seems to me to be to nationalize the GSEs entirely and then eventually have them broken up into bits that are subsequently privatized.