Former Fannie Mae Chief Executive Officer Franklin Raines agreed to pay $24.7 million as part of a settlement with regulators for his role in overstating earnings at the largest U.S. mortgage-finance company.
Former Chief Financial Officer Timothy Howard will surrender $6.4 million in compensation and other money, and Leanne Spencer, who was the Washington-based company’s controller, will pay a $275,000 fine, the Office of Federal Housing Enterprise Oversight said in a statement today.
“My agreement to end this dispute through making a charitable donation of my claim to some Fannie Mae stock, the forfeiture of some stock options, and a payment by the company’s insurance carrier, is consistent with my acceptance of accountability as the leader of Fannie Mae and with my strong denial of the allegations made against me,” Raines said in a separate statement sent by e-mail.
The settlement ends more than a year of fighting between the executives and Ofheo over who was responsible for $6.3 billion in misstatements from 2001 to mid-2004 at the government-chartered company. Ofheo sued Raines, 59, Howard, 58, and Spencer, 54, in December 2006 for more than $215 million, claiming the executives manipulated accounting in order to meet profit and bonus targets.
Fannie Mae, which owns or guarantees more than 20 percent of the $11.5 trillion in U.S. home loans outstanding, has tumbled 60 percent in New York Stock Exchange trading since Raines was ousted in 2004 as the company wrote down the value of mortgage assets amid a slump in credit markets. Fannie Mae is still operating under restrictions imposed by Ofheo after the overstatements under Raines, a Harvard-educated Rhodes Scholar.