What was the Fannie Mae scandal of 1994?
I would like to know about the Fannie Mae accounting scandal from 1994... please help
- Anonymous1 decade agoFavorite Answer
The blowup and bailout of Fannie Mae and Freddie Mac by taxpayers was foretold so many times in the last three decades by critics of the two federally chartered mortgage giants that not even the data-searching powers of Nexis, Factiva, and Google combined can total them.
In 1991 Raines became Fannie's Mae's Vice Chairman, a post he left in 1996 in order to join the Clinton Administration as the Director of the U.S. Office of Management and Budget, where he served until 1998. In 1999, he returned to Fannie Mae as CEO, "the first black man to head a Fortune 500 company."
On December 21, 2004 Raines accepted what he called "early retirement" from his position as CEO while U.S. Securities and Exchange Commission investigators continued to investigate alleged accounting irregularities. He is accused by The Office of Federal Housing Enterprise Oversight (OFHEO), the regulating body of Fannie Mae, of abetting widespread accounting errors, which included the shifting of losses so senior executives, such as himself, could earn large bonuses.
Democrats and groups associated with them leaned on banks and even sued to get them to make bad loans under the Community Reinvestment Act which was a factor in causing the economic crisis.
In these lawsuits, ACORN makes a bogus claim of Redlining (denying poor people loans because of their ethnic heritage). They protest and get the local media to raise a big stink. This stink means that the bank faces thousands of people closing their accounts and get local politicians to lobby to stop the bank from doing some future business, expansions and mergers. If the bank goes to court, they will win, but the damage is already done because who is going to launch a big campaign to get the bank’s reputation back?
It is important to understand the nature of these lawsuits and what their purpose is. ACORN filed tons of these lawsuits and ALL of them allege racism.Source(s): http://en.wikipedia.org/wiki/Franklin_Raines http://www.slate.com/id/2200160 http://www.mediacircus.com/tag/scandal/