Claim: Three former Fannie Mae executives served on Barack Obama’s 2008 presidential campaign as chief economic advisors.
Example: [Collected via e-mail, September 2008]
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 irregularities 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
Raines left with a ‘golden parachute valued at
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
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
Johnson’s Golden Parachute was estimated at
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
IF OBAMA PLANS ON CLEANING UP THE MESS – HIS ADVISORS HAVE THE EXPERTISE – THEY MADE THE MESS IN THE FIRST PLACE. Would you trust the men who tore Wall Street down to build the New Wall Street?
Origins: When one of the hottest issues of a presidential campaign is the meltdown of the mortgage lending industry and the collapse of the economy, a candidate’s having economic advisors on his staff who are strongly associated with the system and practices that helped create the current mess likely wouldn’t sit well with the public. That’s the premise of the above-quoted
Franklin Raines, who formerly headed the budget office for the Clinton administration, became the first black CEO of a
who had earned
Raines had some dealings with the Obama campaign, but he never held any actual position within the campaign (much less as its “chief economic advisor”), and his involvement with it was not nearly as substantial as implied above. As the Washington Post reported when a McCain campaign commercial attempted to link Raines with the Democratic candidate, the whole substance of the connection between the two men was that Raines “had gotten a couple of calls from the Obama campaign” in which they talked about “general housing and economy issues.”
Franklin Raines’ predecessor, James A. Johnson, (former chief of staff to Vice President
In May 2008, Senator Obama tapped James Johnson to be one member of a three-person panel tasked with vetting potential vice-presidential running mates. Johnson (who was not serving as an economic advisor to the Obama campaign) resigned from that position shortly afterwards when news accounts reported that he had received more than
Tim Howard, the former CFO (chief financial officer) of Fannie Mae, was caught up in the same accounting scandal that undid Franklin Raines, and (like Raines) resigned from the company in 2004. We found no substantive connection between Tim Howard and the Obama campaign, however, much less any information supporting the claim that Howard was ever a “Chief Economic Advisor to Obama.”
Last updated: 3 January 2012
Huslin, Anita. “On the Outside Now, Watching Fannie Falter.” The Washington Post. 16 July 2008 (p. D1). Smith, Elliot Blair. “Former Fannie Mae Execs May Face Investigation.” USA Today. 14 June 2006. Superville, Darlene. “Rise and Fall of Fannie Mae Chairman and CEO Franklin Raines.” San Diego Union-Tribune. 30 December 2004. Weisman, Jonathan and David S. Hilzenrath. “Obama’s Choice of Insider Draws Fire.” The Washington Post. 11 June 2008 (p. A1). The Washington Post. “Linking Obama to Ex-Fannie Mae Chief Is a Stretch.” 20 September 2008.