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To: TobagoJack who wrote (57449)	12/22/2004 1:29:11 PM
From: pezz	Read Replies (1) \| Respond to of 74559

Glad to hear you alive and well. I almost thought you had chucked itall and gone to some south sea island. ZICA Timing is everything............. apparently

To: TobagoJack who wrote (57449)	12/22/2004 2:43:09 PM
From: elmatador	Read Replies (1) \| Respond to of 74559

Fannie Mae Under Pressure! Chief Is Ousted at Fannie Mae Under Pressure By STEPHEN LABATON Published: December 22, 2004 ASHINGTON, Dec. 21 - Under heavy pressure from regulators, Fannie Mae, the mortgage finance giant, forced out its chairman and chief executive, Franklin D. Raines, late Tuesday, days after the company was found to have violated accounting rules. The ouster of Mr. Raines, who turns 56 next month, may mean the end of an extraordinary political and business career. Mr. Raines, a high-ranking official in the administration of President Bill Clinton and a prominent Democrat, had traveled from a family that was once on welfare to the pinnacle of government, academia and business. Advertisement In many respects, he was the ideal leader of Fannie Mae when he took the helm six years ago. He represented its public mission, its financial savvy and its political influence. But the polished politician was outmaneuvered by Fannie Mae's regulator, the Office of Federal Housing Enterprise Oversight, a once-obscure agency. Ultimately, he became a casualty of his own vigorous defense of aggressive accounting practices at the company. The agency, known as Ofheo, had in recent days demanded significant changes in the senior management and declared that Fannie Mae had significantly failed to meet its capital requirements - the cushion of money required to cover losses - people involved in discussions between the regulator and the company's board said. The move gave the regulators at the agency the authority to begin taking steps to remove the senior executives. Ofheo decided to use its most powerful regulatory weapon after officials saw reports that members of the Fannie Mae board were continuing to support Mr. Raines even after the Securities and Exchange Commission had found that the company violated accounting rules. Fannie Mae will now embark on a search for a successor to Mr. Raines. In the meantime, it announced that the acting chairman would be Stephen B. Ashley, a 10-year member of its board and a real estate executive from Rochester. Daniel H. Mudd, currently vice chairman and chief operating officer, was named acting chief executive. In taking its actions, the regulators also insisted on splitting the chairman's and chief executive's posts. [Page C1.] The regulators' decision also means that Fannie Mae will have to restate its earnings for the last three and a half years, and that may force it to declare $9 billion in losses, wiping out more than a third of its earnings over the period. Nevertheless, some of Fannie's directors had been persuaded by Mr. Raines's argument that the company's auditor, KPMG, approved its interpretation of the accounting rules and that the S.E.C. had not found that its senior management did anything improper. Until it came under pressure from Ofheo, a divided board of Fannie Mae stood behind Mr. Raines. After the board shifted course on Tuesday and abandoned Mr. Raines, the regulator issued a brief statement declaring that the board was committed to solving the company's problems. "We are encouraged," the statement by Armando Falcon Jr., director of Ofheo, said, that "the board's announcement signals a new culture and a new direction for Fannie Mae." Mr. Falcon said the company had in fact exceeded one of its capital requirements, known as risk-based capital, by $20 billion. But he said that a second measure, known as minimum capital, was short by almost $3 billion as a result of the order by the commission that the company restate its earnings. The company is required to meet both standards to be classified as financially healthy. He also said his agency was "working closely with the board to promptly address the elements of a capital restoration plan and other important reforms." Mr. Raines, breaking a weeklong public silence, issued a statement on Tuesday saying: "I previously stated that I would hold myself accountable if the S.E.C. determined that significant mistakes were made in the company's accounting. Although, to my knowledge, the company has always made good-faith efforts to get its accounting right, the S.E.C. has determined that mistakes were made. By my early retirement, I have held myself accountable." Continued 1 \| 2 \| 3 \| Next>> nytimes.com