Tom Donilon's Revolving Door

President Obama's new National Security Advisor spent the decade prior to joining the White House as a legal advisor to powerful interests including Goldman Sachs and Citigroup, and as a lobbyist for Fannie Mae, where he oversaw the mortgage giant's aggressive campaign to undermine the credibility of a probe into its accounting irregularities, according to government reports and public disclosure forms.

Thomas E. Donilon has been formally advising Obama on national security matters since the president's transition to the White House, and he worked in President Clinton's state department during the 1990s. But in between these high-profile public-sector assignments, Donilon was a highly paid lobbyist who represented an array of well-heeled and powerful clients, including former Republican New Jersey Gov. Christie Todd Whitman and Obama's 2008 campaign fundraising chairman, billionaire heiress Penny Pritzker.

After a stint at the law firm O'Melveny & Myers, where Donilon was registered as a lobbyist for Fannie Mae, he took on full-time work with the mortgage giant as executive vice president for law and policy. Donilon's name appears on Fannie Mae's public lobbying disclosure reports between 2000 and 2005.

While housing sales were still booming, internally these were troubled years for the company. In a report first noted by ABC News in 2008, Donilon is described as someone who lobbied for and helped paint a rosy picture of Fannie Mae's financial health to the company's board. He did so at a time when Fannie Mae faced accusations that it was misstating its earnings from 1998 to 2004. Fannie Mae settled with the Securities and Exchange Commission for $400 million in 2006, and did not admit any wrongdoing.

Donilon's tactics reportedly included attacks on the agency responsible for policing Fannie Mae's operations, the Office of Federal Housing Enterprise Oversight, and an attempt to launch a separate investigation into OFHEO itself, according to a 2006 government report about Fannie Mae. Those efforts were ultimately unsuccessful, and regulators eventually discovered top Fannie Mae executives had been manipulating the company's financial reporting to maximize their bonuses.

During his 2008 campaign, Obama took a hard line on the behavior of lobbyists and decried the revolving door that allowed government employees to use their public sector connections to earn big money when they pass into the private sector. He created a rule that required lobbyists entering his administration to receive a waiver if they planned to do work related to their earlier lobbying efforts. But the restriction only covered those who had been lobbying within two years of taking their administration post. Donilon last registered to lobby in 2005.

A White House official told ABC News Friday that Donilon "did not require or receive a Pledge Waiver before starting as Deputy and does not need one now."

The administration official also noted that Donilon "divested all stock holdings in individual companies by 2/17/09 and did not need a waiver for his remaining assets," which are held in a variety of mutual funds, cash accounts and assorted bonds.

Shortly after Obama's election, ABC News reported on Donilon's efforts on behalf of Fannie Mae from his position overseeing the company's sizeable legal and government affairs divisions.

Donilon did not comment for the 2008 report and his spokesman, Mike Hammer, did not offer comment when contacted Friday.

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.

CLICK HERE to follow the ABC News Investigative Team's coverage on Twitter.

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."

Click Here for the Blotter Homepage.