“Now We Know Where Tens of Millions of Taxpayer-Sponsored Subsidies Are Going”

(Washington, D.C.)  The Council for Citizens Against Government Waste (CCAGW) today blasted Freddie Mac, one of the nation’s two largest housing government-sponsored enterprises (GSEs), for diverting millions of dollars in generous federal benefits to excessive pay and perks packages for executives, as well as contributions to the two major political parties at a time when the company lags the market in buying up low and middle-income mortgages, is under a financial cloud, and is resisting Congress’s attempts to bring accountability and transparency to its financial activities.

“Ever since the Federal Reserve published its findings that one half of the GSEs’ $10 to $15 billion subsidy is being absorbed into the bureaucracy at Fannie Mae and Freddie Mac, members of Congress have been asking ‘where is all this money going?’” said CCAGW Special Projects Director Leslie Paige.  “Now we know.  While Freddie Mac’s executives are toadying up to Congress and claiming publicly that they support a more independent regulator, they are paying millions in bonuses to a hoard of lobbyists to scuttle any real reform behind the scenes.” 

Recent news reports in the Wall Street Journal and the Washington Post have documented excessive compensation expenditures and questionable political contributions.  Freddie Mac’s long-time lobbyist Mitchell Delk received a $2 million bonus for getting Congress to accept a weaker set of financial disclosure rules for the GSEs.  Mr. Delk is now reportedly being asked to resign over alleged improprieties in his political fundraising tactics.  “It is amusing to see Freddie Mac’s executives trying to wash their hands of Mr. Delk.  Both GSEs leverage their lobbying clout and excess profits to ensure that members of Congress will shield the GSEs from any reforms,” commented Paige.  “Given the active executive role in such political activity, it is unlikely that Mr. Delk was acting without his superiors’ knowledge.”

At the same time, Freddie Mac has not solved its accounting problems and refuses to give assurances that it will publish quarterly or full-year earnings statements any time soon.  Gregory J. Parseghian, Freddie Mac’s former CEO, continues to be paid $375,000 per month as a temporary consultant.  He left the company with a $14.3 million severance package and nearly $4 million in bonus payments, which were awarded months after the Freddie Mac was forced to let him go because of his role in its accounting scandal.  “Freddie’s priorities are crystal clear,” said Paige.  “Its executives and lobbyists are reaping huge financial bonanzas and using a lot of those profits to kill reforms that would help consumers and protect taxpayers.  How many mortgages for low and middle income families would these millions have helped pay for?  The GSEs’ activities pose significant risks to our financial system and to taxpayers, yet they operate largely in the dark.  Taxpayers and consumers have underwritten this corporate welfare for years and Congress has consistently looked the other way.  Enough is enough.  Congress must enact a stringent regulatory structure this year to put an end to the GSEs’ contempt for consumers and taxpayers.”

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.