*Franklin Raines Made Millions From Managing Fannie Mae: *Now, he is is
serious legal trouble for decisions he made during those years. Who is
paying his legal bills? We are
<http://www.nytimes.com/2009/09/06/business/economy/06gret.html>.
It is still unclear what the ultimate cost of this bailout will be.
But thanks to inquiries by Representative Alan Grayson, a Florida
Democrat, we do know of another, simply outrageous cost. As a
result of the Fannie takeover, taxpayers are paying millions of
dollars in legal defense bills for three top former executives,
including Franklin D. Raines, who left the company in late 2004
under accusations of accounting improprieties. From Sept. 6, 2008,
to July 21, these legal payments totaled $6.3 million.
With all the turmoil of the financial crisis, you may have forgotten
about the book-cooking that went on at Fannie Mae. Government
inquiries found that between 1998 and 2004, senior executives at
Fannie manipulated its results to hit earnings targets and generate
$115 million in bonus compensation. Fannie had to restate its
financial results by $6.3 billion.
Almost two years later, in 2006, Fannie's regulator concluded an
investigation of the accounting with a scathing report. "The
conduct of Mr. Raines, chief financial officer J. Timothy Howard,
and other members of the inner circle of senior executives at Fannie
Mae was inconsistent with the values of responsibility,
accountability, and integrity," it said.
Raines is a Democrat, something Morgenson doesn't mention --- but so is
Congressman Grayson, who is helping to publicize these payments. (And
deserves some credit for that.)
These payments for his legal expenses are probably required by his
contract, but that doesn't mean we have to like them.
(Ed Morrissey has more
<http://hotair.com/archives/2009/09/07/why-are-we-paying-legal-bills-for-fannie-mae-execs/>
on this scandal. Here's a Raines biography
<http://en.wikipedia.org/wiki/Franklin_Raines>, and here's a limited
defense <http://www.slate.com/id/2107894> of his actions when he was
running Fannie Mae.)
- 11:09 AM, 7 September 2009 [link]
<http://www.seanet.com/%7Ejimxc/Politics/September2009_1.html#jrm7806>
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