Fannie Mae's (FNM) top regulator said it is "more than likely" that the federal government will sue former CEO Franklin D. Raines over the mortgage finance company's accounting fiasco. They will seek to recover bonuses and salary and perhaps impose fines and will include other former company officers, according to this WashingtonPost.com article.
While Fannie Mae paid a $400 million government fine in May for violating myriad accounting rules and overstating its profit by more than $10 billion from 2000 to 2004, as yet no action has been taken against Raines and his former chief financial officer, J. Timothy Howard, the article stated.
In addition, since neither Raines nor Howard were technically fired by the company when the accounting improprieties came to light in 2004, both men took home millions of dollars in severance payments, and Raines received retirement pay of $114,000 a month for the rest of his life.
Fannie Mae, based in the District, is a congressionally chartered private company that provides ready cash to the home mortgage market by purchasing mortgages from lenders. Fannie Mae keeps some loans on its own books but sells most to investors in the form of securities. It is one of the country's biggest financial institutions.
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