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Freddie Mac’s long search for a new legal chief finally ended this spring when it hired Ralph Boyd, Jr., a recent veteran of the Bush administration. The choice was a clear sign that the troubled mortgage company, under fire from regulators and legislators alike, knew it needed more than just a lawyer. Boyd’s political connections — he’s a former top appointee in the U.S. Department of Justice — will come in handy as he oversees both lobbying and legal matters for Freddie Mac. “The expectation is that I will certainly be one of the faces of Freddie Mac, both to Congress and to the public,” says Boyd, who started at the McLean, Va.-based company in April. Boyd, 47, knows how to manage controversy. During his two-year stint as civil rights chief in the Justice Department, he weathered criticism that he weakened civil rights enforcement. Boyd left the agency nearly a year ago to become a partner in the Washington, D.C., office of Alston & Bird, where he advises several scandal-plagued corporations. His client list includes Friedman’s Inc., a jewelry chain based in Savannah, Ga., currently under investigation by Justice and the Securities and Exchange Commission. Since leaving government, Boyd has also signed on as a director at Hughes Electronics Corp., a post he’s keeping. “I haven’t seen the entire universe of issues that � a general counsel needs to be on the lookout for,” says Boyd. “But I’ve seen enough to know what to start to look for.” Freddie Mac (formally known as the Federal Home Mortgage Corp.) and its counterpart, Fannie Mae (the Federal Home Mortgage Association), are chartered by the government to stabilize the residential mortgage market. Both companies — which buy mortgages from lenders and sell them as securities — are exempt from state and local income taxes, and, though publicly traded, aren’t required to file financial statements with the SEC. (Freddie Mac is currently preparing to register with the SEC, a voluntary step that means the company will be subject to the agency’s disclosure requirements.) The problems at Freddie Mac started last year, when it announced that it had understated earnings by nearly $5 billion from 2000 to 2002 in order to meet Wall Street forecasts. The company subsequently ousted several executives, including GC Maud Mater, at the behest of its regulator, the Office of Federal Housing Enterprise Oversight. In a December report, OFHEO wrote that Mater and other company officials had encouraged “minimal” disclosure to regulators and investors. Mater — who served as GC for more than 20 years — could not be reached for comment for this article. But one former Freddie Mac lawyer says Mater’s dismissal was a surprise. “She built a healthy institution in the legal department,” says Donald Brewster. “It was not a dysfunctional place — sometimes eccentric, but never dysfunctional.” Brewster, who left Freddie Mac a year ago to become GC of KB Home Mortgage in Los Angeles, adds that, in practice, Mater encouraged sound disclosure policies. After OFHEO issued its report, Freddie Mac agreed to pay a $125 million civil fine to the agency, and also pledged in a consent order to improve its accounting and disclosure practices. By the end of June, Freddie Mac must submit to OFHEO a plan to “foster a management culture in which appropriate consideration is given to operational stability and legal and regulatory compliance.” The company faces ongoing inquiries by the Justice Department and the SEC. Joan Donoghue took over as Freddie Mac’s acting GC after Mater left the company in August. With Boyd’s arrival, Donoghue shifted into the newly created position of principal deputy general counsel, responsible for the day-to-day operations of the 85-attorney law department. By delegating duties to Donoghue, Boyd has more time to spend on his second major responsibility at Freddie Mac — lobbying. Given the company’s governance lapses, concerted oversight of lawyering and lobbying is necessary, Boyd says: “There needs to be the impression that this is a modification.” Freddie Mac’s image wasn’t helped when its top lobbyist, R. Mitchell Delk, resigned in March after the Federal Election Commission opened an investigation into his fund-raising activities. Lobbying has become even more crucial for Freddie Mac as it takes hits from U.S. Department of the Treasury Secretary John Snow, Federal Reserve Board Chairman Alan Greenspan and other government officials. Congress is currently considering legislation — endorsed by the Bush administration — that would place Freddie Mac and Fannie Mae under the regulation of the Treasury Department instead of OFHEO. Boyd’s appointment could mark a turning point in Freddie Mac’s approach to lobbying, says Richard Carnell, a Fordham University law professor and a former assistant secretary for financial institutions in the Treasury Department. Freddie Mac has historically been less heavy-handed in its lobbying than Fannie Mae, Carnell explains. “At Fannie Mae, there are mostly political people at the top, people who they figured could be heavy hitters,” he notes. Fannie Mae Chairman Franklin Raines, for example, served as director of the Office of Management and Budget under President Clinton. By picking Boyd, a recent veteran of the Bush administration, Freddie Mac seems to have embraced the same political strategy. Lily Henning is a reporter with Legal Times , a Recorder affiliate based in New York City. This article was originally published in Corporate Counsel magazine.

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