Kerry Spot    [ jim geraghty reporting ]
[ kerry spot home | archives | email ]

Perusing this week's BusinessWeek, they had two short stories regarding Ousted Fannie Mae CEO Franklin Raines. Here is one:

Ousted Fannie Mae CEO Franklin D. Raines has quite the gilded parachute to soften his landing. In addition to $19 million in severance payments, Raines, 55, gets a lifetime salary of $1.37 million. If he lives until 75, that's $27.4 million. Add: $21 million in stock already awarded, $23.8 million in future stock payouts, a life insurance policy, and an additional $23.8 million in performance-based options. That's on top of more than $17.5 million paid to Raines since 1999. The grand total is worth $140 million — not bad for just six years on the job.

$140 million for six years? You could get a whole outfield for that. Or two disappointing quarterbacks.

Another profile of Raines, listed as one of the mag's "Worst Managers of the Year", reminds us:

On Labor Day, he was a favorite to be Treasury Secretary should John Kerry win the White House. At yearend, he had left under a cloud...

The Securities & Exchange Commission's top accountant declared that mortgage giant Fannie misstated earnings for 3 1/2 years, leading to an estimated $9 billion restatement that will wipe out 40% of profits from 2001 to mid-2004.

Supporters of Raines, 55, insisted that he wasn't culpable for Fannie's misuse of obscure accounting standards. But that argument didn't wash. Raines was in charge in 2001, when Fannie chose to create what the SEC dryly called "its own unique methodology" to calculate the earnings impact of its trillion-dollar portfolio of derivatives. Raines gave Chief Financial Officer J. Timothy Howard free rein and tolerated "weak or nonexistent" financial controls, according to a scathing report issued in September by the Office of Federal Housing Enterprise Oversight, Fannie's regulator.

It's probably asking too much, but as we consider this Clinton White House budget director and almost-Kerry-Treasury-Secretary, could we see a little less righteousness among Democrats the next time they thunder about outrageous pay for CEOs? Could they remember him next time they rage about irresponsible executives and companies that ignore accounting rules? Could we get the media to avoid the easy shorthand that GOP lawmakers are soft on corporate crime, and that the Democrats are the white-hatted sheriffs who will crack down on boardroom misbehavior?

[Posted 01/02 09:49 PM]