updated 4/18/2006 6:01:25 PM ET 2006-04-18T22:01:25

The home loan giant Freddie Mac has agreed to pay a record $3.8 million fine to settle allegations it made illegal campaign contributions.

The fine announced Tuesday is by far the biggest ever levied by the Federal Election Commission. Because the Federal Home Loan Mortgage Corporation, widely known as Freddie Mac, agreed to pay the fine and stop breaking the law, the FEC said it would not take further action against corporate officials.

“We’re hoping this will catch people’s attention,” Commissioner Ellen Weintraub said, noting that campaign watchdogs have often called the FEC a do-nothing agency. “You don’t want to be the person who beats this fine.”

Freddie Mac was accused of illegally using corporate resources between 2000 and 2003 for 85 fundraisers that collected about $1.7 million for federal candidates. Much of the fundraising benefited members of the House Financial Services Committee, a panel whose decisions can affect Freddie Mac.

The fundraisers were organized by then-Freddie Mac lobbyists Robert Mitchell Delk and Clark Camper, who described them to the corporation’s board of directors as “political risk management,” the FEC said.

The lobbyists told Freddie Mac officials the fundraising effort was needed to help the corporation achieve its lobbying goals. Delk wrote in his 2001 performance appraisal that Freddie Mac had held more than 40 fundraisers for House Financial Services Chairman Michael Oxley, R-Ohio.

The FEC also found Freddie Mac officials used staff and resources to raise money from company employees to give to candidates, and that in 2002 the corporation itself gave $150,000 to the Republican Governors Association. The RGA ultimately returned the money.

U.S. law bans federally chartered corporations such as Freddie Mac from contributing to campaigns, and prohibits companies from using corporate resources and employees to help raise money for congressional and presidential candidates.

The fine is the commission’s largest since the FEC was created after Watergate. The previous record was held by Audiovox, which in 2003 was fined $849,000 in a corporate contribution case.

The FEC opened an investigation of Freddie Mac’s fundraising after the private group Public Citizen filed a complaint in 2003 accusing Delk, his wife Amanda, the Washington restaurant Galileo and the political consulting firm Epiphany Productions of making illegal political contributions.

Public Citizen’s complaint said the Delks made contributions higher than federal limits and the restaurant and Epiphany made illegal corporation donations by providing services for the fundraisers. The FEC decided against taking action against the Delks, Camper, Galileo or Epiphany.

Freddie Mac is one of the two largest U.S. buyers of home mortgages. Its campaign finance settlement comes after the corporation disclosed in June 2003 that it misstated earnings by $5 billion for 2000-2002, bringing calls for tougher government oversight.

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