How much is an invitation worth to an after-hours chablis and cheese reception on Capitol Hill?
In the case of the Federal National Mortgage Association, known around town as Fannie Mae, the answer may be more than $144,000. That's the amount shelled out by its political action committee since 1985 to members of Congress and senators - not including tens of thousands of dollars contributed by its senior executives individually.David Jeffers, vice president of corporate relations for Fannie Mae, suggests that Fannie Mae's political contributions are aimed partly at staying in the "reception circuit." "What (the PAC money) buys you is invitations to receptions," Jeffers told our reporter, Andrew Conte.
While it may be business-as-usual for special interests to schmooze with legislators, what makes this case unique is that the "special interest" is a federal agency, lobbying for its own political agenda and self-preservation.
In fact, Fannie Mae is the only federal agency with its own PAC.
"One cannot make a reasonable case that a governmentally sponsored enterprise (GSE) should be allowed to give contributions to the very legislators responsible for granting special privileges," House Banking Committee member Rep. Jim Leach, R-Iowa, told us.
The privileges extend to executive compensation. Rep. Joe Kennedy, D-Mass., points out that of the 30 people who get paid $1 million or more in Washington, six of them work for government-sponsored enterprises. In 1990, Fannie Mae's president, Roger Birk, cleared $2.2 million with cash compensation, stocks and a $1.1 million performance bonus. Fannie Mae is also the only federal agency whose head retired in 1991 with a lump-sum award of $27 million.
Fannie Mae was created by Congress as one of several GSEs to expand the amount of money available and make it more affordable to finance housing. They are chartered by Congress but owned by private stockholders, and they buy about one-third of all home loans made by lenders. Some are held and others are resold to investors.
Congress granted Fannie Mae and its sister agencies several huge advantages over private corporations. GSEs enjoy multibillion-dollar lines of credit with Treasury, exemption from Securities and Exchange Commission regulations and from all state and local taxes except property taxes.
Although it is highly profitable and healthy, Treasury and Capitol Hill have long feared that taxpayers would be stuck bailing out Fannie Mae and other GSEs since they enjoy at least an implicit government guarantee on their loans as half-public, half-private agencies.
Congressional observers say it is no coincidence that most of the Fannie Mae largesse has been funneled to House and Senate members who serve on financial and housing committees - those charged with Fannie Mae jurisdiction and oversight.
As Leach points out, "The best investment in America for a GSE is in political campaigns. Their whole survival, if not profitability, depends on what legislation is passed."