Obama hires guy who covered for Fannie

Washington Times:

A transition adviser to President-elect Barack Obama earned millions of dollars overseeing an office that led a lobbying effort to prevent increased oversight of mortgage giant Fannie Mae, the company at the heart of the ongoing turmoil in the nation's financial markets, public records show.

The unpaid adviser, Thomas E. Donilon, held several senior positions at Fannie Mae from 1999 to 2005, including vice president of law and policy, at a time when the company's officers and lobbyists were insisting that now-troubled Fannie's finances were sound.

In a 2006 report, the Office of Federal Housing Enterprise Oversight (OFHEO) said Fannie Mae lobbyists, whose office was overseen by Mr. Donilon, tried to use their ties to members of Congress to discredit federal regulators through a campaign aimed at securing the release of a U.S. Department of Housing and Urban Development report to discredit OFHEO.

"Thus, Fannie Mae succeeded in creating a large volume of negative publicity about the OFHEO examination report, in an effort to distract attention from its multibillion-dollars accounting errors," the OFHEO report found.

"That initiative, although conceived and executed by the [Fannie Mae] government and industry relations department, was well-known by many members of senior management," including then-Chairman and Chief Executive Officer Franklin Raines, Mr. Donilon and Fannie Mae's general counsel, according to the OFHEO report.

Mr. Donilon wasn't involved in the accounting irregularities that ultimately prompted OFHEO to seek more than $100 million that Fannie Mae paid out in compensation to Mr. Raines and two other top officials.

Obama aides say that Mr. Donilon will have no say in housing matters and that as a former State Department official, he's providing valuable input during the transition.

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After his years as a State Department official in the Clinton White House, Mr. Donilon was paid more than $1 million in salary and cash bonuses in 2002 and 2003 from Fannie Mae. He was registered as a lobbyist for Fannie Mae as recently as 2005, according to regulatory filings and court records.

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Obama has a knack for compartmentalizing his problem associations. Donilon was just a guy who was in the neighborhood of Fannie when it was being mismanaged and Democrats were taking big salaries for cooking the books. Move along, there is nothing to see here.