Networks’ Silence on Corrupt Fannie Mae Continues

On May 23, the federal government slapped a $400 million fine on Fannie Mae (NYSE: FNM), a mortgage brokerage led by Clinton administration alumni who cooked the books to boost their pay. Of the evening newscasts, only CBS covered the latest development in the company’s accounting scandals, but without any reference to its executives’ Democratic ties.

“When Franklin Raines strode into Fannie Mae’s corporate board room in 1998 to take over as CEO, he was met with applause,” correspondent Anthony Mason began his taped segment on the May 23 “Evening News,” adding that the “government report out today says Raines presided over an arrogant and unethical corporate culture.”

Among the findings of the government investigation, Mason reported, “between 1998 and 2003, Fannie Mae overstated earnings by more than $10 billion, manipulating them to maximize bonuses for company executives, including Raines.”

In all, Mason added, Raines “received $90 million in bonuses during those years, more than $52 million of which was tied to hitting earnings targets.”

Despite a tantalizing political angle, Mason left out Raines’s Democratic connections. Raines served as Clinton’s director of the Office of Management and Budget (OMB) for two years before leaving the White House to head Fannie Mae, and public records available at fec.gov detail his campaign donation history totaling $62,500 to politicians, mostly liberal Democrats.

Raines was not the only Clinton alumnus to profit from accounting irregularities at the mortgage giant. Former Clinton Deputy Attorney General Jamie Gorelick received $779,625 in executive bonuses in 1998, Washington Post reporters Kathleen Day and Terence O’Hara noted in their April 7, 2005, story. In that report, Day and O’Hara noted that “falsified signatures on accounting transactions” in 1998 had “triggered multimillion-dollar bonuses” for top officers like Gorelick, then the company’s vice chairman.

The news networks have generally overlooked Fannie Mae’s scandal, even as the mortgage lender’s overstated earnings are about 19 times larger than Enron’s accounting gimmickry. A Nexis search of the past six months of ABC, CBS, and NBC showed 184 hits for Enron but only eight for Fannie Mae.

The Business & Media Institute has previously documented the media’s lack of interest in what amounts to a “government-sponsored Enron.”

[Cross-posted to BusinessandMedia.org]