Two senior lobbyists for the Federal Home Loan Bank of San Francisco pushed a long-shot idea for ending U.S. control of mortgage giant Freddie Mac, Bloomberg News reported. The proposal, pitched behind closed doors in 2016 by Lawrence H. Parks and Timothy Simons, called for federal home loan banks to buy Freddie using cash windfalls they won in settlements with Wall Street after the financial crisis. The plan was quickly tabled but got revived in 2017 when President Donald Trump took office and top administration officials made clear they wanted the government out of the business of running Freddie and its sibling, Fannie Mae. The scheme ultimately unraveled and has become the focus of a legal battle that pits Parks and Simons against the San Francisco lender, which fired them in 2018. The two men say that they are victims of racial discrimination, while the bank claims that they may have committed fraud. The saga, laid out in a lawsuit Parks and Simons filed last month, reveals the jockeying for influence that’s gone on as Trump’s Treasury Department seeks to figure out a future for mortgage-finance companies that earn billions of dollars. Fannie and Freddie’s near collapse pushed them into the government’s arms almost 12 years ago. Their recovery, along with the crucial role they play in the housing market, has set off a lobbying frenzy among banks, hedge funds and other financial titans that continues to this day.
