Where Was Congress on Bonuses in 2004?

obama/rainesNLPC issued a press release on December 29, 2004 that began:

Peter Flaherty today expressed surprise and disgust at the current attempt by fired Fannie Mae Chairman and CEO Franklin Raines to walk away with millions of dollars despite his central role in the accounting scandal rocking the company.

According to Flaherty, “At the time, I remember having very little luck in drumming up interest in this issue. I was a guest on a couple of local radio shows, but that was it. I made a round of calls to Capitol Hill but nobody wanted to do anything.”

The release continued:

Flaherty said, “Let me get this straight. Raines apparently cooks the books, brings disgrace to the company, and imperils Fannie Mae’s standing with regulators, the Congress and administration. So for his punishment he is made wealthy for the rest of his life?”

According to a December 27 Form 8-K filing with the Securities and Exchange Commission, Raines is entitled to:

• “Deferred compensation” of $8.7 million.

• Stock options currently worth $5.5 million, and potentially millions more.

• “Performance Share Payouts” through 2006, potentially worth millions more.

• A monthly pension of $114,393 for the rest of his life, and for the life of his spouse should she survive him.

• Free medical and dental coverage for the rest of his life, as well as for his wife for the rest of her life, and his children until age 21.

• Free life insurance in the amount of $5 million until age 60, and $2.5 million thereafter.

The agreement even allows for Raines to receive a “cash bonus” for 2004.

Raines stated that, “By my early retirement, I have made myself accountable.” Flaherty reacted by saying, “It is like Enron and Tyco never happened. I cannot even fathom the level of arrogance and self-delusion necessary for Raines to claim he’s been made accountable for his mistakes.”
“This is not a case of foolish or captive directors rewarding a failed executive with a golden parachute. Fannie Mae is not really a private company. It has been granted advantages in the marketplace by Congress that are worth billions of dollars. Raines is not only fleecing Fannie Mae, but also the taxpayer.”