Freddie Mac, the second largest U.S. mortgage finance company, decided it was all right to create a political action committee now that it has begun to provide financial reports that were delayed by accounting errors.

Freddie Mac, which ranked first in corporate donations to political groups from 2001 to 2002, filed papers on Thursday with the Federal Election Commission to form the committee. The PAC will enable the company to direct contributions by its employees to individual candidates and Republican or Democratic campaign groups.

Freddie Mac's top executives held off forming the PAC while they were preoccupied with reducing the company's lag in financial reporting, spokeswoman Sharon McHale said. The reporting delays were prompted by disclosures that Freddie Mac understated earnings from 2000 until 2002 by $5 billion.

``I don't think anyone had any time to think about it -- it wasn't on the radar screen,'' McHale said, referring to election campaign activities. The ``primary focus was to become current in financial reporting.'' Freddie Mac provided its 2003 full-year financial results on June 30 and plans to announce 2004 earnings results by March 31. It filed its restated 2000 to 2002 results last November.

Careful Maneuvering

Freddie Mac doesn't want to move too fast in rebuilding its political campaign efforts because of concern it might draw more scrutiny from lawmakers and Bush administration officials who already want to subject it to stricter regulation, said Tony Raymond, co-founder of PoliticalMoneyLine.com, a Washington-based non-partisan group that tracks campaign giving.

McLean, Virginia-based Freddie Mac is ``weighing the possibility of getting in more hot water,'' so they're ``playing it safe, and making sure they get it right,'' Raymond said.

The company's chief lobbyist, R. Mitchell Delk, quit on March 11 amid a probe that began last year into his compliance with federal election laws concerning campaign contributions.

Four days later, Freddie Mac hired as its government relations director Ralph Boyd, who led the Justice Department investigation into the 2000 presidential election results in Florida. Boyd, who also serves as general counsel, directs company efforts to alter a Bush administration proposal to create a regulator that will tighten control over new lines of business, capital standards, and other operations at Freddie Mac and Fannie Mae.

Donation Amounts

Freddie Mac employees since January 2003 have given $72,000 in political contributions, less than a fifth of the $404,000 in donations by Fannie Mae, which launched a political action committee last year, according to the Washington-based Center for Responsive Politics.

Freddie Mac from 2001 to 2002 ranked first in direct corporate donations to political organizations, giving $4.1 million, compared with $2.3 million by Fannie Mae, according to PoliticalMoneyLine.com.

Freddie Mac ranked second on lobbying expenditures from July through December of last year, spending $9.96 million or nearly twice the amount for the same period of 2002, according to PoliticalMoneyLine.com. The American Association of Retired Persons spent more on lobbying than any other organization, budgeting $16.4 million.

Freddie Mac's PAC will contribute roughly in equal amounts to Republicans and Democrats, giving ``to federal candidates who share our beliefs and support Freddie Mac's mission'' to expand homeownership, McHale said. The PAC during its first six months can give $2,000 to a candidate per election.

Congress created Fannie Mae and Freddie Mac to make funds more widely available for mortgage loans and reduce the cost of homeownership. The companies hold or guarantee almost half of the $7.3 trillion U.S. mortgage market and profit from the difference between the cost of debt they issue and the return on mortgages they buy.

Fannie Mae, started in 1938, went public in 1970. That year Congress created Freddie Mac, which was first publicly traded in 1989.

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