WASHINGTON - Before President 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 this 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.
The government took over Fannie Mae's smaller cousin, Freddie Mac, in 2008 in a rescue that 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.
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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.
"There were a variety of proposals during that time that had the intention of better oversight but undermined the basic strength of the structure of Fannie Mae," said Jeffers, who now is president of Collingwood Communications, a strategic communications firm in banking and housing.
"The company felt strongly that the portfolio was an important component in keeping the company strong financially," he added.
Others have a different view of Donilon's agenda.
"Mr. Donilon's actions at Fannie Mae to undercut meaningful reform precipitated the largest taxpayer-funded bailout in American history," Sen. Richard Shelby said Friday night. "Now president Obama is entrusting him with America's security."
Shelby, from Alabama, is the ranking Republican on the Senate Banking Committee.
