Yesterday's press accounts of the $400 million fine levied on Fannie Mae left me furious over the amazing lack of detail on the scandal itself and especially its perpetrators. From the WaPo:
Fannie Mae engaged in "extensive financial fraud" over six years by doctoring earnings so executives could collect hundreds of millions of dollars in bonuses, federal officials said yesterday in a report that portrayed a company determined to play by its own rules.
Regulators at the Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight, in announcing a settlement with Fannie Mae that includes $400 million in penalties, provided the most detailed picture yet of what went wrong at the congressionally chartered firm.
They portray the District—based mortgage funding giant —— a linchpin of the nation's housing market —— as governed by a weak board of directors, which failed to install basic internal controls and instead let itself be dominated and left uninformed by chief executive Franklin Raines and Chief Financial Officer J. Timothy Howard, who both were later ousted.
I am currently traveling and only have access to my notebook computer and the internet in the late evening and early morning hours, so I was unable to follow—up when I read the story in an airplane from an actual dead—tree newspaper (which got ink all over my fingers — something that never happens with the internet).
Fortunately, my friend Reliapundit has done the first stage of the heavy lifting at The Astute Blogger.
The two senior executives at Fannie Mae are both Clintionistas, Franklin Raines the ousted CEO was bad enough. The Vice Chairman of Fannies Mae was non other than Jamie Gorelick, who also bears responsibility for the wall which prevented information sharing between intelligence and law enforcement agencies, leading to the disaster of 9/11 when Moussaoui's arrest did not yield the proper conclusion that a terror attack was being planned. Gorelick compounded her malfeasance by serving on the 9/11 Commission and obscuring the trail of repsonsibility and ommitting consideration of the Able Danger database.
I take considerable comfort that the investigation is now in the hands of SEC Chairman Chris Cox, someone I have known for more than 30 years to be a man of superb intellect and integrity, and bulldog tenacity to boot.
Fannie Mae, a private corporation, enjoys extraordinary privileges, including an implicit federal guarantee of its debt. It has now been shown to have been massively corrupt. I hope that Chairman Cox is able to prosecute those responsible to the full extent of the law. Raines received $50 million dollars in bonuses thanks to shady accounting tricks. That is a sum which surely merits long imprisonment if he is found guilty in a court of law.
Thomas Lifson 5 24 06
Share