Fannie, Freddie in the Political Spotlight
Ordinarily when Fannie Mae announces its quarterly earnings, chief financial officer Timothy Howard has a conference call with analysts and talks for the better part of an hour about the numbers that drive the performance of Washington's biggest business.</br></br>Interest rate trends; comprehensive net interest margins; what it costs Fannie to borrow money, compared with what it costs the U.S. Treasury; LIBOR rates; T-bill spreads--it adds up to billions of dollars measured off in basis points, each of which is one one- hundredth of a percentage point.</br></br>But this month, when Fannie put out its second-quarter financials, the conference call was dominated not by the jargon of Wall Street, but the spin control of Washington. Thomas E. Donilon, Fannie's executive vice president for law and policy, took over the teleconference and made a point of introducing Arne Christenson, senior vice president for regulatory policy. Christenson was, Donilon reminded the Wall Streeters, chief of staff to Newt Gingrich when he was House speaker.</br></br>When your chief executive, Franklin Raines, used to be President Clinton's budget director and your vice chairman, Jamie Gorelick, is Clinton's former deputy attorney general, it's important for the politically naive numbers nerds on Wall Street to understand that you have a balanced offense. Because from that point on in the call, it was pure politics.</br></br>"We manage our political risk with the same intensity we manage our other risks," proclaimed Donilon, assuring investors they do not have to worry about all the bad things being said in Washington about Fannie Mae.