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Here is a quick look into 3 former Fannie Mae executives who have brought down Wall Street.

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 irregulaties 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
Gaines to return $50 Million Dollars he received in bonuses based on the
mis-stated Fannie Mae profits.

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 Advisor
- 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

Chip's Blog

Three Men Who Brought Down Wall Street

Chip

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