Posted on 05/25/2006 9:42:08 AM PDT by april15Bendovr
Study: 'Extensive financial fraud' by Fannie Mae execs
By Kathleen Day
Washington Post
WASHINGTON - Fannie Mae engaged in "extensive financial fraud" over six years by doctoring earnings so executives could collect hundreds of millions of dollars in bonuses, federal officials said Tuesday in a report that portrayed a company determined to play by its own rules.
Regulators at the Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight, in announcing a settlement with Fannie Mae that includes $400 million in penalties, provided the most detailed picture yet of what went wrong at the congressionally chartered firm.
They portray the Washington-based mortgage funding giant - a linchpin of the nation's housing market - as governed by a weak board of directors, which failed to install basic internal controls and instead let itself be dominated and left uninformed by chief executive Franklin Raines and Chief Financial Officer J. Timothy Howard, who both were later ousted.
The result was a company whose managers engaged in one questionable maneuver after another, including two transactions with investment banking firm Goldman Sachs Group Inc. that improperly pushed $107 million of Fannie Mae earnings into future years. The aim, OFHEO said, was always the same: To shape the company's books, not in response to accepted accounting rules but in a way that made it appear that the company had reached earnings targets, thus triggering the maximum possible payout for executives including Raines, Howard and others.
The settlement closes regulators' civil probe into Fannie Mae's accounting scandal, the result of the company's misstating earnings by about $10.6 billion from 1998 through 2004.
SEC Chairman Christopher Cox and acting OFHEO director James B. Lockhart III said they now will turn their focus to individuals, including Raines and Howard, to determine what role former and current executives played in the accounting fraud and if they should be forced to forfeit millions of dollars in what the regulators called "ill-gotten" compensation. They said the Justice Department is continuing a criminal probe.
"Fraudulent financial reporting cheats investors of their savings," Cox said. "Those whose actions led to the accounting fraud you've heard described today will be vigorously pursued."
Lockhart agreed. "You could argue none of it was deserved," he said in response to a question on how much of $52.8 million in bonuses Raines received during the six years might have been linked to improper accounting manipulation. As the settlement was announced, OFHEO released a 340-page report summarizing what it found in its nearly three-year probe of the company.
ping
None of these big corporate frauds were caught when Clinton was President.
Bush really is cleaning up.
Remember this story
GLOBAL CROSSING BANKRUPTCY: GOP INSIDERS QUESTION DNC CHAIRMAN MCAULIFFE PROFIT, TURNED $100,000 INTO $18,000,000
http://www.drudgereport.com/mattgcc.htm
the fannie mae execs are blacks or democrats.
No way will this make the news media.
This one is too big for the MSM to sweep under the rug, and is just a start of the fraud they have been doing to the US taxpayers. I hope they all get 25 to life in the pokey.
JAMES A. JOHNSON James A. Johnson is Vice Chairman of Perseus, L.L.C., a merchant banking and private equity firm based in Washington, DC and New York City. Beginning in January of 1990 and continuing through December 1999 he was employed by Fannie Mae. He served as Vice Chairman (1990), Chairman and CEO (1991-1998), and Chairman of the Executive Committee (1999). Prior to joining Fannie Mae, Johnson was a managing director in corporate finance at Lehman Brothers. Before joining Lehman, he was the president of Public Strategies, a Washington- based consulting firm he founded to advise corporations on strategic issues. From 1977 to 1981, he served as executive assistant to Vice President Walter F. Mondale, where he advised the Vice President on domestic and foreign policy and political matters. Earlier, he was employed by the Target Corporation, worked as a staff member in the U.S. Senate, and was on the faculty at Princeton University. Johnson serves as chairman of The John F. Kennedy Center for the Performing Arts and is chairman of the board of trustees of The Brookings Institution. He also serves on the board of the following organizations: The Enterprise Foundation; Gannett, Inc.; The Goldman Sachs Group, Inc.; KB Home; National Association on Fetal Alcohol Syndrome; National Housing Endowment; Target Corporation; Temple-Inland, Inc.; and UnitedHealth Group. He is also a member of The American Friends of Bilderberg, The Business Council, the Council on Foreign Relations, the Trilateral Commission, and he is Chairman of the Advisory Council for Public Strategies Incorporated. In March 1994, Johnson was named "CEO of the Year" by The George Washington University School of Business and Public Management. He also was named a 1998 Washingtonian of the Year by WashingtonianMagazine. In May 2001, he was elected to the American Academy of Arts and Sciences. Johnson received a B.A. degree in political science from the University of Minnesota and a Masters Degree in public affairs from the Woodrow Wilson School at Princeton. In 1997, Mr. Johnson received an Honorary Doctor of Laws Degree from Colby College, in 1999 he received an Honorary Doctor of Humane Letters Degree from Howard University, and in 2002, he received a Doctor of Laws Degree from Skidmore College.
Franklin Raines was born January 14, 1949. He attended Harvard College in Boston, where he received his B.A. degree magna cum laude. He continued his education at Harvard Law School where he graduated cum laude with his J.D. (law degree). His studies also included Magdalen College and Oxford University (as a Rhodes Scholar). He went on to serve as the Associate Director for Economics and Government in the Office of Management and Budget (OMB), Executive Office of the President; and Assistant Director of the White House Domestic Policy Staff between 1977 and 1979. He then joined the firm of Lazard Freres & Company where he was a general partner. His tenure there was 11 years. From 1991 to 1996, he was Vice Chairman of Fannie Mae, in charge of the company's legal, credit policy, finance, and other corporate functions. For two years he was the President's (William Jefferson Clinton) key negotiator in the talks that led to passage of the bipartisan Balanced Budget Act of 1997. Raines was the first OMB director in a generation to balance the federal budget. Raines also helped the President manage the federal government by coordinating procurement, financial management, information technology, and regulatory policies for all federal agencies. The Fannie Mae Board of Directors designated Raines as the successor to James A. Johnson in April 1998. From May through December 31, 1998, Raines served as Chairman and CEO-Designate. Franklin D. Raines now serves as Chairman and Chief Executive Officer of Fannie Mae. Fannie Mae is the largest non-bank financial services company in the world. He became Chairman and Chief Executive Officer on January 1, 1999.
Jamie S. Gorelick (born May 6, 1950) was the number two official in the U.S. Department of Justice during the Clinton administration. She was appointed by Senate Democratic Leader Tom Daschle to serve as a commissioner on the bipartisan National Commission on Terrorist Attacks Upon the United States, which sought to investigate the circumstances leading up to the terrorist attacks of September 11, 2001. Gorelick served as Vice Chairman of the Federal National Mortgage Association from 1997 to 2003. Before serving as Deputy Attorney General of the United States, she was General Counsel of the Department of Defense and a prominent attorney with the firm of Miller, Cassidy, Larroca & Lewin. She also served as an assistant to the U.S. Secretary of Energy from 1979 to 1980. Gorelick was president of the District of Columbia Bar from 1992 to 1993. She is currently a law partner in the Washington office of Wilmer, Cutler & Pickering.
You don't bite the hand that feeds you!
I wonder how this might affect RE values,if at all.
GLOBAL CROSSING BANKRUPTCY: GOP INSIDERS QUESTION DNC CHAIRMAN MCAULIFFE PROFIT, TURNED $100,000 INTO $18,000,000
3 words:
Windfall profits tax.
The Houston Comical "missed" out on the Enron scandal. Then again they were partnered with Ken Lay to get a new ballpark built downtown (51% of the vote approval).
And the same Comical has never missed an opportunity to drag Tom DeLay's name in the mud (because he opposed federal tax funding of their goofy and dangerous downtown rail).
I am working on the restatement at Fannie Mae as a consultant. They are throwing a lot of money at fixing this.
"None of these big corporate frauds were caught when Clinton was President.
Bush really is cleaning up."
Bull, it is ALL Bush's fault. Don't ya know?
This article coupled with those Fannie Mae execs with Johnson being attached to the Bildeberg Society, Trilateral Commission (Gorelick too), Council on Foreign Relations (Gorelick too), 9/11 Commission farce, TWA fight 800 cover-up, conveniently high gas prices, etc., Gorelick's memo to keep the FBI, INS, Just. Dept., NSA from sharing intel., no one in government hardly arrresting and deporting illegals, no secure borders....this is the government telling its citizens the "We don't give a 'F' about what you want! We're running the show to protect the assets of the very rich!!"
They have let Franklin Raines and Jamie Gorelick off the hook...they SHOULD have been INDICTED!! The Justice Dept is broken......they FINED a CROOKED semi-Govt. Company which WE WILL PAY, and the CROOKS get away with big bucks!!!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.