Fannie Mae's strategy, according to the 2006 report by the Office of Federal Housing Enterprise Oversight, was to neuter the agency charged with the company's oversight. "The goal of senior management was straightforward: to force OFHEO to rely on [Fannie Mae] for information and expertise to such a degree that Fannie Mae would essentially regulate itself," the report stated.
As this effort to minimize scrutiny was expanding, Fannie Mae's accounting practices began raising questions. In late 2003, its sister organization, Freddie Mac, disclosed it had misstated its accounting. Seeing the problems, OFHEO stepped up its monitoring of Fannie Mae and in a preliminary report in 2004 alleged the company had improperly used reserves to smooth its earnings.
ABC News reported that Fannie Mae executives began pushing back hard against the criticism. Its lobbyists -- overseen by Donilon -- pushed U.S. lawmakers to limit OFHEO's budget, and make it subject to annual approval. "[W] ith the knowledge and support of senior management," Fannie Mae's lobbyists "used their longstanding relationships with Congressional staff to attempt to interfere with OFHEO's special examination," according to the report.
They also tried to get OFHEO investigated. Email trails show that Fannie Mae lobbyists drafted legislation that required a probe into how the agency spent its money. While that effort was "conceived and executed" by the government relations team, it was "well known by many members of senior management" including Donilon," the report stated.
Shortly after Donilon's appointment to Obama's transition team in November 2008, Obama spokesperson Tommy Vietor said in a statement to ABC News that "Mr. Donilon is volunteering his time and more than 30 years of accomplishment to help prepare the State Department for an efficient transition to the President-elect, who is taking office at a time of war and when we are confronting a complex and challenging international environment. Mr. Donilon's experience in foreign affairs as Assistant Secretary of State and Chief of Staff at the State Department is critical to this review process."