(CNSNews.com) - Mortgage giants Freddie Mac and Fannie Mae have come under fire for making contributions to programs headed by the Rev. Jesse Jackson at a time when their own survival is at stake.
Peter Flaherty, founder and president of the conservative National Legal and Policy Center (NLPC), told Cybercast News Service that the gifts to Jackson were “clearly inappropriate” and “extremely controversial.”
The NLPC says the management teams of both companies made sizeable contributions to the Rainbow/PUSH Coalition and Citizenship Education Fund Annual Conference, Jackson’s main fundraising event of the year. The conference took place June 28 through July 2 in Chicago.
According to the conference program, obtained by an NLPC staff member who attended the event, Freddie Mac, as a “Platinum Sponsor,” paid $150,000. Fannie Mae paid $100,000 to be listed as a “Diamond Sponsor.”
Both Freddie Mac (The Federal Home Loan Mortgage Corporation) and Fannie Mae (The Federal National Mortgage Association) are private corporations chartered by Congress and responsible to the federal government.
The NLPC noted that the contributions came at a time when the value of the companies’ shares had declined by approximately 85 percent.
Last Saturday, meanwhile, the Treasury Department announced it would offer a line of credit to ensure the survival of each company. Both have been hurt by the collapse of the nation’s sub-prime mortgage market.
“It is outrageous that rapidly evaporating shareholder equity is still being dished out to Jesse Jackson,” Flaherty said. “The CEOs of these companies have repeatedly shown poor judgment, and this is just more evidence.”
The NLPC has criticized the companies for funding Jackson’s projects since 1998, the first year that Freddie Mac contributed. Flaherty said the contributions came after Jackson accused Freddie Mac of racial discrimination and encouraged major shareholders to sell stock in the company.
“Freddie Mac began financial support for Jackson’s organizations, and his criticism of Freddie Mac stopped,” the NCLP said.
After Freddie Mac signed a $1 million contract for Rainbow/PUSH to run an “Economic Literacy” program, Jackson’s nonprofit coalition turned around and charged churches $1,000 to enroll in the program, the NCLP said.
Freddie Mac also pledged to earmark $1 billion in mortgage loans specifically for minorities.
In 2003, an independent report commissioned by the Freddie Mac board criticized the company’s accounting practices, singling out 13 improper transactions involving Ron Blaylock, Jesse Jackson’s longtime financial backer. According to the report, Blaylock received fees of $250,000 for making some phone calls.
The NLCP also criticized what it called the “incredibly generous ‘golden parachute’” that Fannie Mae provided to fired CEO Franklin Raines in 2004. Raines was accused of manipulating the company’s earnings over a six-year period to meet earnings’ targets and receive hundreds of millions of dollars in bonuses.
“The unfortunate thing about these [government-sponsored enterprises] is that they’ve provided good jobs for underemployed politicians and they’ve been slush funds for liberal groups. And the Jesse Jackson gifts, as the companies are melting down, is a dramatic example of that,” Flaherty said.
Freddie Mac was recognized by the Washington Business Journal and Greater D.C. Cares as the top corporate philanthropist in the Washington region. Freddie Mac and the Freddie Mac Foundation have invested over $348 million in the Washington area since 1991.
Over the past five years, Fannie Mae and its foundation have contributed over $100 million to organizations and initiatives in Washington, D.C.
Calls to both Freddie Mac and Fannie Mae were not returned. The Rev. Jesse Jackson, the sole spokesman for Rainbow/PUSH Coalition, did not return calls before deadline.