OFHEO Issues Consent Orders Regarding Former Fannie Mae Executives
|April 21, 2008|
Stipulation and Consent Order: Mr. Raines [pdf] |
Stipulation and Consent Order: Mr. Howard [pdf]
Stipulation and Consent Order: Ms. Spencer [pdf]
Washington, DC – OFHEO Director James B. Lockhart today announced the issuance of three Consent Orders dealing with former Fannie Mae Board Chairman and Chief Executive Officer (CEO) Franklin D. Raines, former Chief Financial Officer (CFO) J. Timothy Howard and former Controller Leanne Spencer. The orders require certain actions by the individuals and settles OFHEO’s administrative enforcement actions against them for events related to the accounting and internal control problems at Fannie Mae uncovered by OFHEO and detailed in two Special Examination Reports.
The three respondents consented to the Orders in settlement of an OFHEO administrative Notice of Charges filed against them on December 18, 2006. The administrative action alleged that the respondents, among other charges, undertook inappropriate earnings management, failed to ensure that adequate internal controls were put in place, released misleading financial reports and permitted the accounting function to operate without adequate resources. The charges concluded that such allegations represented misconduct and unsafe and unsound practices that led to losses suffered by Fannie Mae.
“OFHEO’s mission is to ensure that the Enterprises operate in a safe and sound manner,” said Lockhart. “That cannot occur without corporate management providing prudent and responsible leadership and setting the appropriate ethical and overall ‘tone at the top’. The Consent Orders announced today represent a satisfactory conclusion to the enforcement actions against these individuals. OFHEO continues to work with the current leadership of the Enterprises to ensure they meet the highest standards for corporate governance and corporate integrity,” Lockhart said.
The Notice of Charges sought an order to cease and desist, civil money penalties, disgorgement, reimbursement and other relief. In satisfaction of the Notice of Charges, the Consent Orders place several requirements upon the parties as follows:
From Mr. Raines, a total of $24.7 million comprised of: