Republicans Killed Fannie/Freddie Reform

...not the Democrats. In fact, Freddie Mac apparently forked over $2 million to a GOP consulting firm to scuttle the legislation.

Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.

In the cross hairs of the campaign carried out by DCI of Washington were Republican senators and a regulatory overhaul bill sponsored by Sen. Chuck Hagel, R-Neb. DCI's chief executive is Doug Goodyear, whom John McCain's campaign later hired to manage the GOP convention in September.

Freddie Mac's payments to DCI began shortly after the Senate Banking, Housing and Urban Affairs Committee sent Hagel's bill to the then GOP-run Senate on July 28, 2005. All GOP members of the committee supported it; all Democrats opposed it.

In the midst of DCI's yearlong effort, Hagel and 25 other Republican senators pleaded unsuccessfully with Senate Majority Leader Bill Frist, R-Tenn., to allow a vote.

"If effective regulatory reform legislation ... is not enacted this year, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole," the senators wrote in a letter that proved prescient.

Unknown to the senators, DCI was undermining support for the bill in a campaign targeting 17 Republican senators in 13 states, according to documents obtained by The Associated Press. The states and the senators targeted changed over time, but always stayed on the Republican side.

In the end, there was not enough Republican support for Hagel's bill to warrant bringing it up for a vote because Democrats also opposed it and the votes of some would be needed for passage. The measure died at the end of the 109th Congress.

McCain, R-Ariz., was not a target of the DCI campaign. He signed Hagel's letter and three weeks later signed on as a co-sponsor of the bill.

By the time McCain did so, however, DCI's effort had gone on for nine months and was on its way toward killing the bill.

Both sides still are responsible for the Fannie/Freddie meltdown, let's not forget that the Dems blocked the reform efforts from the beginning, but Hagel reform measures included the elimination of programs for minority homebuyers. It turns out the "free market" took care of these subprime targets all too well, the only reason Republicans were willing to add "regulation" to Fannie and Freddie were so they could shut out minority homebuyers from federal mortgage cash by cutting funding for low-income housing programs.

But the Republicans also turned on ANY notion of reforming Fannie and Freddie once the lobbyist money started flowing, and they were able to buy off both sides of the aisle too. The mortgage companies then stepped into the gap, and when the GOP saw how much money was being made, they quickly abandoned efforts to fix Fannie and Freddie.

Still, the fact that the GOP-led Congress wouldn't even let the measure up for a vote says something.