In his written testimony, Raines noted that Fannie Mae’s outside auditor, KPMG, had endorsed the company’s application of accounting rules.
Some of the findings by the Office of Federal Housing Enterprise Oversight “involve highly detailed issues that I would not normally focus on in my role as CEO,” Raines said.
HEY FRANK. YOU WERE CEO OF A MORTGAGE INVESTMENT COMPANY. YOUR ENTIRE BUSINESS CENTERS ON ACCOUNTING FOR THE MONEY YOU LEND PEOPLE. TOO DETAILED????
Perhaps this is the same philosophy that the 0bama campaign uses for handling facts. FACTS ARE VERY DETAILED ISSUES THAT I WOULD NOT NORMALLY FOCUS ON IN MY POSITION AS CANDIDATE FOR PRESIDENT.
For the sake of argument, we'll accept that. Why then, when one of your employees repeatedly brought these issues to you, did you ignore them? Above your pay grade?
good good
run with this team mcCain
Complex accounting standards, Mr. Raines? Well of course they are. All the better to confuse and confound the American public.
Is this actually an MSNBC story? I’m shocked!
Raines was part of the $9 billion cooking of the books at Fannie Mae which led to multi-million dollar bonuses to him, and to his enablers on the Board such as Jamie Gorelik (remember her?).
And now Raines is a "financial adviser" to Obama? A crook advising an empty suit? How scummy can the Obama campaign become?
Congressman Billybob
Who else was involved with the Fannie Mae/Mac problems besides Raines is part of the Obama campaign? Seems like one of his VP pickers was also part of the mess. How about an ad pointing this out?
The article makes no linkage at all to Obama or his campaign.
If indeed there is a linkage, it will be up to the McCain campaign, the RNC, and 527s to let the public know about it. The media simply will not link the two. 1,000 voices will drown out the 100 conservative media voices. Unless Drudge sirens it.
A growing need - Fannie Mae ‘s Franklin Raines says immigrant and minority ownership are changing the face of the industry.
Star Tribune: Newspaper of the Twin Cities (Minneapolis, MN) - May 1, 2002
Author: Neal Gendler; Staff Writer
RSEC: If the United States is to meet the anticipated demand for housing, last year’s strong rate of 1.6 million new homes will have to continue for a decade, Franklin Raines , CEO of Fannie Mae , said Tuesday.
Speaking at the Minnesota Meeting public forum in downtown Minneapolis, Raines , who leads the nation’s largest source of residential mortgage funding, said the housing boom that helped sustain the economy through the recession was fueled by immigration, which in the 1990s was the highest in 90 years. About 16 million new homes will have to be built by 2010 to keep up with demand, he said.
``We find among immigrants the same desire for homeownership as among native-born Americans,’’ Raines said.
In an interview, Raines said an estimated 85 percent of U.S. households would like to own their homes. About 74 percent of white households already do, so the home-selling and mortgage-lending growth potential is in bringing up minority ownership. ``It’s not a `good deed’ anymore; it’s where the heart of the business is,’’ he said.
``Among black families, less than half own a home,’’ said Raines , a Rhodes scholar who served for two years in President Clinton’s cabinet as director of the Office of Management and Budget. ``We’re getting close to 50 percent, which is an achievement. But we’ve got to get beyond that, and the farther you go, the harder it gets’’ because the easier problems have been solved.
Between 1993 and 2001, Fannie Mae ‘s financing for black home buyers rose 194 percent _ and 205 percent for Hispanics. So if things are so good, why is the disparity still so wide?
``We’re coming from a low level,’’ he said. ``Ownership has grown faster among racial minorities than any other group in the 1990s. But it was coming from 44 percent and we got it up to 47, 48 percent. . . . We have a long way to go.’’
Fannie Mae does not lend directly to consumers but buys loans from lenders, packages them for mortgage-backed securities and uses the proceeds to make more loans. The government-chartered firm has been a leader in making mortgages more widely available by lowering down-payment requirements, widening income-to-debt ratios acceptable for a market-rate loan, and expanding criteria to prove credit-worthiness.
Six months ahead of schedule, Fannie Mae completed a 1994-2000 program to fund $1 trillion to increase homeownership among underserved populations. It now is two years into an ``American Dream Commitment’’ of $2 trillion to fund ownership for 18 million targeted households by 2010.
(snip)
FANNIE MAE BOSS IGNORED WARNINGS , EX-STAFFER SAYS
New York Post (NY) - October 7, 2004
Author: RICHARD WILNER
The whistle-blower who revealed alleged accounting irregularities at Fannie Mae yesterday charged CEO Franklin Raines with ignoring his warnings of balance-sheet shenanigans, then retaliating by forcing him out of the company.
Roger Barnes, who worked in the controller’s division, said he sent an e-mail to Raines in September 2002 alerting the CEO that the way the nation’s No. 1 holder of mortgage debt was dealing with amortizing debt violated accounting rules.
Raines never responded, Barnes said.
The whistle-blower, who said he was forced from his Fannie Mae job last summer, spoke out for the first time about his role in alerting Fannie Mae ‘s regulator, the Office of Federal Housing Enterprise Oversight (OFHEO), to the irregularities.
His testimony came in the form of a written statement submitted to the House Finance Services Committee, which held a hearing yesterday concerning giving OFHEO increased muscle.
The explosive testimony could cost Raines his job and spur the Justice Department to open a full-fledged criminal probe of the matter.
According to Barnes, Fannie Mae CFO J. Timothy Howard and other top brass fully endorsed accounting measures that “managed” expenses and profits.
One year after Barnes went public with his accusations, OFHEO released a 200-page report ripping into Fannie Mae ‘s financial practices, calling them “cookie jar” accounting.
Fannie Mae deferred expenses and income in order to produce steadily growing profits which allowed Raines and Howard to line their pockets with millions in bonuses, the report found.
“It became a joke that the Controller’s division could produce any income statement that the Company wanted,” Barnes said in his testimony. Last year, Raines earned $20 million in total compensation, including $7 million in bonuses.
Earlier in the day, Raines , fighting for his job and political future, told lawmakers at the hearing that he did nothing wrong. The 55-year-old Washington veteran said Fannie Mae did its best to follow “highly complex” accounting rules.
It was the first time Raines , on the short list of choices to become Treasury Secretary in a possible Kerry administration, has addressed charges he and Howard promoted a policy to cook Fannie Mae ‘s books.
OFHEO Director Armando Falcon, Jr., led off a short list of witnesses by continuing his blistering attack on Fannie Mae .
It goes back further than that
http://www.washingtonpost.com:80/wp-dyn/articles/A32845-2005Apr6.html
Email this to Drudge and others..
That demonstrates a pretty serious misunderstanding of the requirements of Sarbanes-Oxley.
Welcome to FR and good job discovering this.
Bizarre. I knew about the looming problems - that would absolutely lead to collapse - in 1998/99 and all I did was read the Wall Street Journal, which carped on and on and on about what was happening at Mae.
We will only see this information here at FR!
These guys again ... recall when they issued the phony-baloney *clean bill of health* accounting review for the shenanigans that had been going on in Arkansas, D.C. for the Clintons??
I’d like to see the report from the auditors of the significant accounting differences. Those reports are usually given to the board and management and rarely see the light of day outside the locked board cabinet and management offices.