“So the only thing I can see this advertising as being about is currying political goodwill, which is lobbying in another form, something that Fannie and Freddie are forbidden from doing.”


Adam Levitin | Fannie and Freddie Charitable Donations?

I’m generally skeptical about corporate charitable donations. My sense is that they are primarily a transfer of value from shareholders to managers, rather than a value-enhancing investment in goodwill. So on the DC Metro, what did I see today, but a poster advertising the 2012 DC Servathon that featured the logos of a variety of corporate sponsors, including Fannie Mae and Freddie Mac.

Aren’t Fannie and Freddie insolvent and in conservatorship? Whatever one thinks of corporate charitable donations, they are a lot harder to justify when the corporation is insolvent. Critically, as far as I can tell, the sponsorship is from Fannie and Freddie themselves, NOT their charitable foundations–at least there is no indication that it is the foundations, not the GSEs involved. If that is correct, then why on earth is FHFA permitting Fannie and Freddie to make charitable donations? It is practically a fraudulent conveyance. It is also using taxpayer money for charitable donations outside the appropriations process. That strikes me as really problematic. It also raises the question why FHFA will let Fannie and Freddie spend taxpayer money on charitable donations, but not on principal writedowns that might actually save taxpayers money in the long run.

Rest here…