Thursday, October 9, 2008
Obama's buddy who ruined Fannie Mae - Franklin Raines
Hat tip: email today from a friend
" Franklin Rains is the former chairman and chief executive officer of Fannie Mae, the government sponsored enterprise started in 1939 to offer mortgages to Americans wishing to become home owners. After serving as budget director under President Bill Clinton, Mr. Raines served as CEO at Fannie Mae from 2000 until 2004. While Mr. Raines was CEO, Fannie Mae went deep into the practice of buying mortgages based on almost no or no money down given to borrowers who could not afford them.
During this time he received bonuses and salary over 90 million dollars. In 2004 he was offered 'early retirement' after the accounting practices used at Fannie during his tenure to secure top executive bonuses were shown to be fraudulent. Civil charges were filed against Raines and two other former executives which sought $110 million in penalties and $115 million in returned bonuses from the three accused. On April 18, 2008, the government announced a settlement with Raines together with J. Timothy Howard, Fannie's former chief financial officer, and Leanne G. Spencer, Fannie's former controller.
The three executives agreed to pay fines totaling about $3 million, which will be paid by Fannie's insurance policies. When pressed by the Bush administration to tighten down regulations on Fannie Mae and Freddie Mac, members of congress - Republicans and Democrats alike - in positions to pass such regulations, did nothing.
Today, Fannie Mae owns or guarantees over half of America's 12 trillion dollar mortgage market, and we are in the middle of a credit crunch and housing slump brought on in large part by government backed Fannie Mae going down this dangerous credit slope under Mr. Raines.
And where is Franklin Raines today? He is a chief economic advisor to the presidential campaign of Senator Barack Obama."