Posted on 09/20/2008 3:01:02 PM PDT by doug from upland
NOTE: this is from several years ago with a 2006 update. Raines actually made $90 million.
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Proving you can fool most of the people most of the time until you get caught, Franklin Raines, who reigned for 5 years following Clinton's appointing him as CEO of Fannie Mae, the US' quasi-governmental mortgage house, has been ousted.
There are several ongoing investigations of Fannie Mae's operations and accounting practices covering the last 5 years in order to determine when accounting irregularities started and the magnitude of the financial shortfalls. Current estimates indicate that there was a $9 billion misstatement of earnings and accounting irregularities between 2000-2004.
Former chief executive Franklin Raines received more than $40 million in bonuses and other pay as a result of falsely inflated earnings at the US' largest mortgage finance company. This is according to a supplement of a lawsuit filed by Ohio Attorney General Jim Petro. Fannie Mae added "tens of millions of false revenue" to meet "Raines' 1999 publicly announced goal to double" earnings over the next five years, Petro's November 23, US District Court in Washington alleges. The filing alleges that, "Raines personally profited by over $40 million by this false earnings history.
Update -- 2/22/2006: Former Senator Warren Rudman's team of investigators and auditors selected from his law firm, Paul, Weiss, Rifkind, Wharton & Garrison, and from Huron Consulting Group presented their 600-page report calling Fannie Mae's accounting systems "grossly inadequate." It is based on a review of millions of documents.
The report found that accounting obfuscations were intended to increase stock valuations, thus increasing executive bonuses.
Raines was one of the most influential and politically savvy figures in Washington is identified by the Rudman investigation as not directly knowing that Fannie Mae's accounting practices violated rules. The report does state, "We did find, however, that Raines contributed to a culture that improperly stressed stable earnings growth and that... he was ultimately responsible for the failures that occurred on his watch".
Raines will continue to live well being supported by Fannie Mae's shareholders. Some relevant facts include: -- Raines and his wife will be paid $114,393 a month as long as they live. -- Stock options: Raines holds vested stock options worth roughly $5.7 million. -- Stock bonuses: Raines was granted awards, payable in stock, for reaching performance goals. Under the program, he got 69,577 shares... half of what Fannie determined he should receive in January. At Monday's close, the shares are worth $4.9 million. It is unclear if he will receive the rest. -- Deferred pay: For tax planning while employed by the company, Raines was allowed to put off the receipt of payment. These deferred past payments total $8.7 million -- Future salary: Although Fannie Mae says Raines' retirement was effective December 21, 2004, he is seeking to have it effective as of June 22, 2005, and thereby receive $600,000 more in pay.
Mr. Raines followed a well-worn path in the United States during the later half of the 20th century. His humble beginnings were in Seattle. He won a scholarship to Harvard and was a Rhodes Scholar at Oxford. He worked on Wall Street for over a decade in the prestigious firm Lazard Freres. He was a member of President Clinton’s cabinet and director of his Office of Management and Budget. In 1999, Clinton selected him for the position of Fannie Mae CEO.
Following revelations of the financial scandal, Mr. Raines took early retirement from Fannie Mae so that he could collect a compensation package including $1 million per year for life and $11 million in vested stock. In 2003 Mr. Raines was paid $20 million in salary and bonus.
Fannie Mae is facing criminal investigations by the Justice Department, operational investigations by the SEC, and various Congressional investigations. There are questions regarding earnings statements being incorrectly inflated. In 2003, if derivative and other losses had been included, no bonuses would have been paid to top executives. However, deferral of the losses allowed declared earnings to reach a level which triggered maximum executive bonuses.
It is a far stretch to imagine that Franklin Raines actually was capable of satisfying the requirements of the positions he held from Harvard to Director of the White House Office of Management and Budget. If he had been competent enough to hold those positions, how could he have been Fannie Mae's CEO for 5 years and allowed, not known about, or not understood that $9,000,000,000 was being mishandled.
This will not stop until examples are made and serious jail time is handed down!
I want to see every single politically connected thug who profited from this prosecuted to the fullest extent allowed by law.
This is Enron times 1,000.
If I posted what I was really thinking Jim would toss me forever....
L
They republicans were in charge during and after Raines, they did nothing.
Franklin Raines to pay $24.7 million to settle Fannie Mae lawsuit
By MARCY GORDON
The Associated Press
WASHINGTON — Former Fannie Mae chief Franklin Raines and two other top executives have agreed to a $31.4 million settlement with the government announced today over their roles in a 2004 accounting scandal.
Raines, former Fannie chief financial officer Timothy Howard and former controller Leanne Spencer were accused in a civil lawsuit in December 2006 with manipulating earnings over a six-year period at the company, the largest U.S. financer and guarantor of home mortgages.
Raines, a Seattle native and prominent Washington figure who was President Clinton’s budget director, is relinquishing company stock options, proceeds from stock sales and other benefits. His part of the settlement is worth $24.7 million,
They are all in bed together and protecting each other. They only get boisterous at election time.
Jail Birds of a feather...
One of the many looters in the wake of Hurricane Fannie.
ping
CRA, Acorn, Fannie Mae ,as run by Affirmative Action Raines, are the reason we are in the mess we are in.
Obama's candidacy is the continuation of placing unqualified people to fill quotas and make liberals feel good.
May 26, 2006
“If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole. I urge my colleagues to support swift action on this GSE reform legislation.”
Senator John McCain
McCain tried to get the Democrats to pass a bill to deal with this F&F mess in 2005, but it was just too good of a stuffed goose. It was their own personal little goose that laid the golden egg. McCain explained in the wording of the bill that if measures weren’t taken, this exact scenario was what he predicted. Democrats in Congress, obstructionists to the end, thinking of the party and not the country, refused to do anything but stick their thick heads in the sand.
A setting senator can lock up the senate for months if he wants to bad enough. There is a difference between lip service about doing something and actually doing something. Most in congress are really good at the lip service thing.
It would be interesting to know whether or not Raines has given a nice chunk of change to Clintoon’s “charitable” foundation. With Clintoon, there is always “What’s in it for me?”
Criminal
Adding this to the Timeline Project / Link List of Bailout History:
http://www.freerepublic.com/focus/f-bloggers/2093845/posts
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