Former Fannie CEO denies he manipulated earnings

Franklin Raines, former chief executive officer of
Fannie Mae,
who resigned from the company in 2004 amid controversy over its accounting
irregularities, continues to deny accusations Fannie manipulated earnings to
boost profits and bonuses.

Raines told The Washington Post he was ‘sorry for the accounting
errors’ which cost shareholders more than a billion dollars to fix, leading up
to his appearance before the House Oversight and Government Reform Committee
tomorrow, when he and his successor, Daniel Mudd, will join Leland Brendsel and
Richard Syron, former Freddie Mac CEOs, to be questioned on what brought down
the mortgage giants.

The Fannie restatement in 2006 of its results between 2001 and 2003 reduced
the company’s earnings by $6.3bn. Raines said that, of the $90m he was said to
be awarded by the government, he had lost $36m in stock options which had no
value because Fannie’s stock price had collapsed or he was forced to forfeit as
part of an agreement with the government.

Raines said he resigned from Fannie before the company made the decisions
which ultimately undermined its financial health. He said claims that he acted
inappropriately to inflate earnings was untrue.

Further reading:

Johnson takes CFO post at Fannie Mae

Fannie Mae appoints third FD this year

The Washington Post story

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