Was McCain's campaign manager in the tank for Fannie/Freddie?


Let's be polite. It looks like John "Straight Talk Express" McCain may have misspoken when he said that his campaign manager did not receive money from Freddie Mac (NYSE: FRE). McCain said in a CNBC interview on September 21 that his campaign manager, Rick Davis, "has had nothing to do with [Freddie and Fannie Mae (NYSE: FNM)] since [2005], and I'll be glad to have his record examined by anybody who wants to look at it," according to the New York Times. He was either kidding, having a senior moment, or worse. It turns out that Freddie paid Davis "$15,000 a month from the end of 2005 through [August 2008]," according to the Times.

Although Davis did not do much for the money -- besides retain his ties to McCain -- his firm, David Manafort, got $500,000 from Freddie and $2 million between 2000 and 2005 as president of "the Homeownership Alliance, which [Freddie and Fannie] created to help them oppose new regulations," according to the Times. It's too bad because more regulation might have prevented the need to spend $200 billion worth of our money to bail out Fannie and Freddie bondholders like PIMCO's Bill Gross and China's People's Bank.

Sure, McCain has been trying to change the subject -- by creating, what I consider to be, false advertisements that accuse a former Fannie CEO of advising Obama. (This former CEO and the Obama campaign both deny the ad's claim, according to the Times). And while McCain's "verbal missteps" may disturb some, his pattern of working closely with those who deregulated the financial services industry links him to what put our economy in the tank. After all, his chief economic advisor, Phil "Americans are Whiners" Gramm, deregulated the Credit Default Swap (CDS) market that helped bring down Lehman Brothers and American International Group (NYSE: AIG).

His history of using his power to get money stretches back to the 1980s when the 73-year-old's efforts to protect an S&L CEO -- who helped his wife with a real estate deal -- cost taxpayers $3.4 billion. If this is the sort of temperament that you believe is best suited to handle the financial challenges that surely lie ahead, you can vote for McCain on November 4.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns AIG shares and has no financial interest in the other securities mentioned.

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