The federal government has announced that it will be bailing out Fannie Mae and Freddie Mac, two government-sponsored enterprises that “own or guarantee almost half of the country’s $12 trillion in outstanding home mortgage debt,” making it potentially the “largest financial bailout” in U.S. history. As part of the deal, both the CEOs of Fannie and Freddie were fired.
The Bush administration has named a close ally of Sen. John McCain (R-AZ) to take over Fannie Mae. Herbert Allison has worked at Merrill Lynch and TIAA-CREF. However, he also served as McCain’s 2000 national finance chairman.
On Feb. 27, 2000, the Austin-American Statesman noted the close relationship between McCain and Allison, saying that they “regularly” talked:
McCain is a one-man polling operation, each day soliciting the opinions of dozens of people who don’t even know they’re advising him. … McCain soaks up anecdotal advice and ideas from all walks of life. He talks regularly with publisher and analyst William Kristol; journalists Charles Krauthammer and R.W. Apple; high-tech executive Andy Grove; money man Herbert Allison; telecom executive Sol Trujillo; foreign policy luminaries such as Henry Kissinger, Jeane Kirkpatrick and Brent Scowcroft; and even people such as actor Warren Beatty (who suggested that McCain’s campaign accept no money at all).
On Jan. 24, 2000, Fortune reported that if McCain won the election, the “best bet” to become his Treasury Secretary was Allison. In 1999, Allison told Crain’s New York Business [12/20/99] that he had been “tremendously impressed by McCain,” who “has courage and high integrity, and he believes in campaign finance reform.”