Freddie Mac Fallout

Given that the Freddie Mac fine, the largest in FEC history at $3.8 million, is based on a sua sponte submission, meaning that the company asked the FEC to look into the matter after its own invetigation, I began to have a few questions.

Having spent a number of years assisting PACs with the FEC and state compliance, I have usually conseled clients to implement policies and procedures designed to avoid problems and keep things clean. In the event that something comes up that feels wrong, I have usually been of hte mindset that it is better to correct the problem on your own rather than calling attention to the issue with the FEC. But sometimes, the problem is so egregious or complicated that such efforts are not feasible.

I did a search in the FEC Enforcement Query system looking for cases with a "sua sponte" submission by a committee, company or organization. The search turned up 48 cases, about half of which resulted in a fine. The lesson with these and now Freddie Mac is that is does not necessarily pay to come forward with your issues, but let the FEC take care of things themselves. With limited investigative resources and rules, that is probably the most prudent action from a risk management perspective. If a company follows the FEC record retention rules to the letter, after a period of time, problems literally go away.

But on another level, with all the focus on the ethics of lobbying and lobbying reform, coupled with an interest among policy makers for limiting political activity as it relates to funding of campaigns, will greater scrutiny be paid to how political fundraisers are produced and operated. When Conress is in session, literally hundreds of fundraisers occur every day. Outside of those run by the campaigns themselves, will small intimate fundraisers--a favorite of the lobbying community, go the way of hte dinosaur? The restaurant and hotel lobby in DC is certainly going to oppose such moves since a significant portion of their business comes from such events. Yet at the same time, it is these kinds of events, if poorly managed, that lead to the greatest risk, as Freddie Mac has learned.