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May 22, 2006 -- Legal Center Calls for Removal of Chairman Oxley over Freddie Mac Scandal
Rep. Oxley to Serve as Guest of Honor at American League of Lobbyists Lunch Tomorrow In a letter to House Speaker Dennis Hastert (R-IL), the Campaign Legal Center urged that Rep. Michael Oxley (R-OH) be stripped of his Chairmanship of the House Financial Services Committee. The call for his removal was a result of his directly benefiting from the illegal fundraising activities of Freddie Mac during a period that legislation to further regulate the Government-sponsored entity was stifled in his Committee. Despite being prominently linked to the fundraising scandal, Chairman Oxley will be the featured attraction at a lunch hosted by the American League of Lobbyists tomorrow (May 23, 2006) at noon at the Washington Court Hotel.
Freddie Mac recently paid a record $3.8 million fine to settle a complaint that it illegally used corporate treasury funds to sponsor Congressional fundraisers that raised nearly $3 million dollars. Most of the 85 fundraising events were hosted by Freddie Mac to benefit Chairman Oxley at a time when legislation was pending before Chairman Oxley's committee that Freddie Mac opposed.
The full letter to Speaker Hastert is below.
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May 18, 2006
The Honorable Dennis Hastert
Speaker
United States House of Representatives
Washington, D.C. 20515
Dear Speaker Hastert:
We are writing to you to express our concern about the relationship between Representative Mike Oxley, chairman of the House Committee on Financial Services and Freddie Mac, a shareholder-owned corporation involved in the area of accessible and affordable housing, in light of recent events. As you are aware, Freddie Mac recently agreed to pay a $3.8 million fine to the Federal Election Commission (FEC) to settle allegations that they used corporate money to pay for fundraisers for Members of Congress. This was the largest penalty ever obtained by the FEC in a civil enforcement action.
According to a 2002 internal Freddie Mac document made public as part of the Conciliation Agreement with the Federal Election Commission (FEC), Freddie Mac lobbyist Michael Delk approached Chairman Oxley about coordinating a series of "bold and unprecedented" fundraising events. "We offered to use our fundraising model to marry his interests as Chairman with our interests in assisting committee members supportive of the continued strength of America's housing finance system…", Mr. Delk wrote in an internal memo to the Freddie Mac Board. These events were part of approximately 85 fundraisers held by Freddie Mac for Members of Congress and their political action committees over a 2-1/2 year period. According to the Conciliation Agreement between Freddie Mac and the FEC:
"[t]o compensate for [Freddie Mac's] lack of PAC, M. Delk embarked on a fundraising effort on behalf of the corporation; in the past 18 events (sic), held over 75 events for Members of the House financial services committee; raising almost $3 million (90 percent of events were hosted by M. Delk to benefit Chairman Oxley)."
During this period, legislation was pending in the House Financial Services Committee to further regulate Freddie Mac. However, this legislation was never reported out of the appropriate subcommittee for further action, despite the strong support of its chairman, Richard Baker (R-LA), according to a July 19, 2003 Richmond Times Dispatch article .
Chairman Oxley benefited enormously from the fundraising events that Freddie Mac sponsored. In turn, Freddie Mac benefited from the demise of proposed legislation aimed at further regulating its operations. These facts strongly suggest that Chairman Oxley played a significant role in preventing the Freddie Mac legislation from moving forward a t the same time he was benefiting from the organization's fundraising support.
These circumstances strongly suggest the appearance of impropriety and possible violations of federal statutes, as well as House ethics standards. This situation is exactly the sort of matter the Committee on Standards of Official Conduct should be investigating to ensure that the American people can have faith in the people's house. However, the Committee is in disarray and has essentially ceased to function in the 109th Congress.
Therefore, the only remedy immediately available lies with you as the leader of the Republican Conference. The Conference has the power to determine committee chairmanships. Chairman Oxley's recent activities in connection with the Freddie Mac legislation, while accepting millions of dollars as a result of Freddie Mac's fundraising efforts, raise serious ethical issues. In view of the seriousness of this matter, we believe the Republican Conference under your leadership should relieve Chairman Oxley of his chairmanship until these serious allegations are resolved. Members of Congress should not be permitted to retain a committee chairmanship while sullying the reputation of the House, as Chairman Oxley has done.
Statutes
The Federal Election Campaign Act (FECA) forbids "any candidate, political committee, or other person knowingly to accept or receive any [corporate] contribution." 2 U.S.C. §441b(a). FECA defines a "contribution or expenditure" to include "any direct or indirect payment, distribution, loan, advance, deposit, or gift of money, or any services, or anything of value." 2 U.S.C. §441b(b)2. An internal Freddie Mac document stated, "we proposed to Chairman Oxley a political model that was bold and unprecedented. We offered to use our fundraising model to marry his interests as Chairman with our interest in assisting committee members supportive of the continued strength of America's housing finance system…." This document would indicate that Congressman Oxley clearly knew about use of corporate money and resources that would be used to coordinate fundraisers for his benefit.
The facts also lend themselves to possible allegations of bribery. See 18 U.S.C. § 201(b)(2)(A), 18 U.S.C. § 201(c)(1)(B). During the three years that Freddie Mac hosted campaign fundraisers for Oxley, there was legislation to further regulate Freddie Mac pending in one of the subcommittees of the Financial Services Committee. As noted above, the Republican chair of the subcommittee, Rep. Richard Baker (R-LA) supported the legislation, but still the legislation died in the subcommittee.
House Rules
According to the Ethics Manual for Members, Officers, and Employees of the U.S. House of Representatives, each Member of Congress "shall conduct himself [or herself] at all times in a manner which shall reflect creditably on the House of Representatives" and "shall adhere to the spirit and the letter of the Rules of the House of Representatives." The Code of Ethics for Government Service further states that "any person in Government service should: … 4. Never discriminate unfairly by the dispensing of special favors or privileges to anyone, whether for remuneration or not; and never accept for himself or his family, favors or benefits under circumstances which might be construed by a reasonable person as influence the performance of his governmental duties."
At best, Chairman Oxley was the recipient of lavish campaign contribution during a time period when legislation that would have regulated Freddie Mac was pending in his Committee and he let that legislation die in his committee. At worst, the contributions appear to be a kind of quid pro quo for Congressman Oxley killing the Freddie Mac legislation.
If true, these activities would violate the bribery laws discussed above and the House Campaign Activity Rules which states, "no solicitation of a campaign or political contribution may be linked to any action taken or to be taken by a Member or employee in his or her official capacity." This rule is based on 5 U.S.C. §7353.
The American public must be able to trust its representatives in Congress. This trust is undermined when corporations are allowed to bypass federal law and the House Rules to curry favor with powerful Chairmen who determine the fate of legislation in their committees. We urge you to relieve Chairman Oxley of his Chairmanship in light of these circumstances, in the interest of protecting the integrity of the House.
Sincerely,
J. Gerald Hebert
Executive Director &
Director of Litigation
Meredith McGehee
Policy Director
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