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Focus Group Flap at Fannie Mae

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At the request of client Fannie Mae, GSD&M's market research firm has informed 19 Capitol Hill staffers that they may have violated congressional ethics rules by accepting cash in exchange for participating in two focus groups.

The Austin, Texas-based agency hired research firm OMR to test three radio and nine print ads promoting the federally subsidized mortgage company's image. Last week OMR, in Greenbelt, Md., sent a letter to those congressional staffers, noting, "It has come to our attention that the honorarium you received may not comply with House and Senate ethics rules."

Participants were asked to return the money they received, $200 apiece for an hour of work, so OMR could donate it to charity. The average focus-group pay for "opinion leaders" in Washington, D.C., is $125-$250, according to one research firm.

While this is the first time the practice has been questioned, Fannie Mae has used Capitol Hill staffers in focus groups six times, including the most recent session, in November, said rep Bob McCarson. "As a private corporation with a free-speech right, we are constantly doing research on our image," he said. "It should not come as a shock to anyone that a congressionally chartered company head quartered in Washington would do public-policy advertising. One of the key audiences is Capitol Hill."

But under congressional ethics rules, conflict-of-interest concerns arise when staffers who may be involved in drafting legislation accept money from outside parties.

House ethics committee rules state that staffers paid below the senior-level rate of $99,096 a year—as the focus group participants were—cannot accept an honorarium if "the subject matter is directly related to his or her official duties, the payment is made because of the individual's status with the House or the payor has interests before the House that the employee may affect."

GSD&M said the staffers were recruited randomly. Fannie Mae and GSD&M declined to identify the staffers or say whether they work on committees that could adopt legislation affecting the mortgage firm.

Industry trade groups declined comment. But one source noted that Fannie Mae's status as a quasi-governmental entity makes the focus-group practice "incestuous at least."

GSD&M downplayed the matter. "What we have here is a small misunderstanding affecting very few people," said rep Eric Webber.

GSD&M, Fannie Mae's agency since 1992, said this is the first time it has used Capitol Hill staffers in focus groups for its clients, which include AARP and the Air Force.

OMR president Jill Siegel said agencies often request Hill staffers for focus groups. "We have never run into this before," she said. "We are sending the letters just in case there was any possibility that the honoraria received does not comply with the ethics rules."

Some of the ads tested are expected to break in the Washington market next month. Fannie Mae spent an estimated $45 million in media last year, according to CMR.