Housing giant dropped meeting with McCain adviser

[Ron Burgundy]

Last March, a consultant to Freddie Mac arranged a meeting between the top economist in John McCain's campaign and Hollis S. McLoughlin, a prominent Republican and top executive at the failing housing giant that is central to the nation's credit crisis.

The scheduled meeting with McCain economic adviser Douglas Holtz-Eakin never took place because a number of Freddie Mac executives objected that it would have been inappropriate, according to three people familiar with the episode.

The executives pointed out to McLoughlin that there was no such outreach to the campaigns of Democratic candidates, said the three people, who spoke on condition of anonymity.

The consultant who arranged the meeting, Harry Clark, is the founder of a Washington lobbying firm.

Out of a special account that McLoughlin controls, the Freddie Mac executive has been paying Clark more than $10,000 a month. McLoughlin has been using the same account to pay $15,000 a month to the lobbying firm of Rick Davis, McCain's campaign manager, according to the three people.

The payments have been made despite a scaling back of Freddie Mac's government relations budget. The budget cutting began several years ago following serious accounting problems at Freddie Mac that tarnished its public image.

"Hollis protected Harry Clark and Rick Davis by intentionally moving their contracts into an account that Hollis controlled and had to review and approve," said one of the three people familiar with the financial arrangements.

Davis has been a focus of controversy this week because Freddie Mac and Fannie Mae, the other failing mortgage giant, paid him or his lobbying firm more than $2 million dating back to 2000.

Freddie Mac and Fannie Mae were placed into government conservatorship this month because of their precarious financial condition.

So far, McLoughlin has survived a sweeping set of management changes at Freddie Mac that were carried out by the government conservator who is running the company.

McLoughlin, Freddie Mac's senior vice president for external relations, declined through spokeswoman Sharon McHale to comment about the canceled meeting and the payments to Clark and to Davis's firm.

Regarding the planned meeting between McLoughlin and Holtz-Eakin, "the objection was that Freddie Mac was not making a bipartisan outreach effort to other campaigns," said another of the three people familiar with the episode.

The reason for the meeting was that "Hollis thought McCain would likely win the election and Hollis wanted to begin making the case for Freddie Mac's continued existence as early as possible," said the third person with knowledge of the planned meeting.

On Saturday, McCain campaign spokesman Brian Rogers said that "if the meeting was set up, it was just one of a series of meetings" that Holtz-Eakin does with a whole range of people from places besides Freddie Mac.

Rogers pointed out that Holtz-Eakin has a long record of being a critic of Freddie Mac and Fannie Mae.

Clark said the idea for the meeting was his, not McLoughlin's.

"I've known Doug for years; I suggested to Hollis that he ought to meet Doug," said Clark.

Rogers, the McCain campaign spokesman, said Holtz-Eakin and Clark are "acquaintances" who have "met a few times."

From 1989 through 1992, McLoughlin was assistant secretary of the Treasury in the administration of President George H.W. Bush. McLoughlin served as chief of staff to Sen. Nicholas Brady, R-N.J., in 1982 and to Rep. Millicent Fenwick, R-N.J., from 1975 to 1979.

Clark is the managing partner of Stanwich Group LLC, which includes Freddie Mac on its list of clients who it advises on public policy and other strategic issues. Clark retired in 2001 as managing partner of a Washington lobbying firm that he founded, Clark & Weinstock, which also lobbied on behalf of Freddie Mac.

On Friday, in a major housecleaning, McLean, Va.-based Freddie Mac said its chief financial officer, Anthony "Buddy" Piszel; chief business officer Patricia Cook; and Timothy McBride, senior vice president for government and industry relations, were leaving the company, effective immediately.

Clark said he and Davis, McCain's campaign manager, are friends and stay in touch, but that "I didn't talk to Rick Davis" to set up the meeting.

Starting in late 2005 or early 2006, Freddie Mac began paying Davis's lobbying firm $15,000 a month. The payments continued until the government takeover of Freddie Mac this month. From 2000 to 2005, Freddie Mac and Fannie Mae teamed up to pay Davis at least $30,000 a month to run the Homeownership Alliance, a group that advocated policies backed by the two mortgage giants.

The McCain campaign said earlier this week that Davis has not taken any compensation from his lobbying firm since 2006.

source: AP - http://news.yahoo.com/s/ap/20080927/ap_on_el_pr/mccain_freddie_mac [link]