WASHINGTON — Before President Barack Obama picked him to be his next national security adviser, Tom Donilon was a lobbyist for mortgage giant Fannie Mae and fought off congressional attempts to impose new regulations.
As Fannie Mae’s legal counsel and top strategic thinker in the late 1990s to the middle of the past decade, Donilon left his sizable imprint on the company long before its takeover by the government amid the wreckage of the housing market.
By that time, Donilon had moved on, well before what critics said was a day of reckoning after years of inadequate regulation and lax oversight.
In early 2008, seven months before disaster struck, Fannie Mae and its smaller cousin, Freddie Mac, held in their portfolios or guaranteed $4.9 trillion in home-mortgage debt. The government took over Freddie Mac the same day. Their rescue has cost taxpayers more than $148 billion so far.
Obama announced Friday that Donilon would replace Gen. James Jones as national security adviser after having served as Jones’ deputy since January 2009.
A longtime Democratic operative, Donilon for six years beginning in 1999 was a registered lobbyist and top executive at Fannie Mae, leaving in 2005. His tenure coincided with efforts in Congress to rein in the mortgage giant with tougher regulations and greater oversight.
David Jeffers, Donilon’s former chief spokesman, says Donilon believed in strong regulation and oversight of the company, but maintains that many of the approaches that were circulating in Congress were not the right ones.
The main one was that Congress wanted to downsize its own creation, a government- sponsored corporation that had become a housing industry behemoth — one that some on Capitol Hill felt should be forced to sell off part of its portfolio.
Others have a different view of Donilon’s agenda, suggesting that Donilon wanted to preserve the mortgage giant’s empire and head off any attempt by Congress to lessen Fannie Mae’s huge footprint on the mortgage market.
“Mr. Donilon’s actions at Fannie Mae to undercut meaningful reform precipitated the largest taxpayer-funded bailout in American history,” said Sen. Richard Shelby. “Now President Obama is entrusting him with America’s security.”
Shelby, from Alabama, is the ranking Republican on the Senate Banking Committee.
