Skip to comments.Video: Comparing Fannie/Freddie to Enron/Worldcom/Tyco
Posted on 10/02/2008 12:48:15 PM PDT by PajamaTruthMafia
A new YouTube group, Taxpayers for Truth, has a good question to ask today. The Bush administration frog-marched executives from Enron, Tyco, and Worldcom into federal prison for their financial shenanigans, in collapses that look positively microscopic in the wake of the failure of Fannie Mae and Freddie Mac. Why hasn’t anyone in the recent failure received the same treatment?
Here is the roster presented by the video, in brief:
So how about the officers of Fannie Mae, who conducted similar kinds of fraud in their financial statements in order to pad bonuses and keep regulators from discovering their precarious position until it was too late? Franklin Raines never faced criminal charges, and instead settled a civil suit with a $2 million payoff — which came from Fannie Mae’s insurance company. Jim Johnson didn’t even have to do that much.
And where are they now? The Washington Post reported twice that Raines was advising the Barack Obama campaign, although they denied it. Jim Johnson still advises the Obama campaign and had briefly led the search for a running mate. Supposedly the FBI has begun a criminal probe into the actions of Fannie Mae management over the years, but we’ll see if that proceeds.
The final quote at the end says it all.
I posed that very question here when this mess started. Two words: Big Oil.
Here is a quick look into 3 former Fannie Mae executives:
Franklin Raines was a Chairman and Chief Executive Officer at Fannie
Mae. Raines was forced to retire from his position with Fannie Mae when
auditing discovered severe irregularities in Fannie Mae’s accounting
activities. At the time of his departure The Wall Street Journal noted,
‘Raines, who long defended the company’s accounting despite mounting
evidence that it wasn’t proper, issued a statement late Tuesday
conceding that ‘mistakes were made’ and saying he would assume
responsibility as he had earlier promised. News reports indicate the
company was under growing pressure from regulators to shake up its
management in the wake of findings that the company’s books ran afoul of
generally accepted accounting principles for four years.’ Fannie Mae
had to reduce its surplus by $9 billion.
Raines left with a ‘golden parachute valued at $240 Million in benefits.
The Government filed suit against Raines when the depth of the
accounting scandal became clear.
http://housingdoom.com/2006/12/18/fannie-charges/ . The Government
noted, ‘The 101 charges reveal how the individuals improperly
manipulated earnings to maximize their bonuses, while knowingly
neglecting accounting systems and internal controls, misapplying over
twenty accounting principles and misleading the regulator and the
public. The Notice explains how they submitted six years of misleading
and inaccurate accounting statements and inaccurate capital reports that
enabled them to grow Fannie Mae in an unsafe and unsound manner.’ These
charges were made in 2006. The Court ordered Raines to return $50
Million Dollars he received in bonuses based on the miss-stated Fannie
Get $240 million and have to give back $50 million—not bad work if you can get it.
Tim Howard - Was the Chief Financial Officer of Fannie Mae. Howard ‘was
a strong internal proponent of using accounting strategies that would
ensure a ‘stable pattern of earnings’ at Fannie. In everyday English -
he was cooking the books. The Government Investigation determined that,
‘Chief Financial Officer, Tim Howard, failed to provide adequate
oversight to key control and reporting functions within Fannie Mae,’
On June 16, 2006, Rep. Richard Baker, R-La., asked the Justice
Department to investigate his allegations that two former Fannie Mae
executives lied to Congress in October 2004 when they denied
manipulating the mortgage-finance giant’s income statement to achieve
management pay bonuses. Investigations by federal regulators and the
company’s board of directors since concluded that management did
manipulate 1998 earnings to trigger bonuses. Raines and Howard resigned
under pressure in late 2004.
Howard’s Golden Parachute was estimated at $20 Million!
Jim Johnson - A former executive at Lehman Brothers and who was later
forced from his position as Fannie Mae CEO. A look at the Office of
Federal Housing Enterprise Oversight’s May 2006 report on mismanagement
and corruption inside Fannie Mae, and you’ll see some interesting things
about Johnson. Investigators found that Fannie Mae had hidden a
substantial amount of Johnson’s 1998 compensation from the public,
reporting that it was between $6 million and $7 million when it fact it
was $21 million.’ Johnson is currently under investigation for taking
illegal loans from Countrywide while serving as CEO of Fannie Mae.
Johnson’s Golden Parachute was estimated at $28 Million.
WHERE ARE THEY NOW?
FRANKLIN RAINES? Raines works for the Obama Campaign as Chief Economic
TIM HOWARD? Howard is also a Chief Economic Advisor to Obama
JIM JOHNSON? Johnson hired as a Senior Obama Finance Advisor and was
selected to run Obama’s Vice Presidential Search Committee
“Why hasnât anyone in the recent failure received the same treatment? “
DemocRats are absolved from any investigations by this administration.
Remember how Bush treated the sacking of the White House by the outgoing Clinton gang???