Statement of Robert B. Barnett, Attorney for Franklin D. Raines

7 March 2006

"[W]e did not find that [Raines] knew that the Company's accounting practices departed from GAAP in significant ways." (Executive Summary 5)

-- "[W]e saw no indication that [Raines] knew that the Company's application of FAS 133 contained substantial departures from GAAP." (Executive Summary 9)

Mr. Raines announced in October of 2004 that he would hold himself accountable if it was determined that Fannie Mae misapplied accounting rules. When the SEC made that determination in December of 2004, Mr. Raines retired early and ended his long career at Fannie Mae. As he told Senator Rudman and his team, Mr. Raines strongly believes that, as the leader of Fannie Mae, he should be accountable for what happened within the organization, regardless of his personal involvement or fault. He does not disagree with the Report's statement that "he was ultimately responsible for the failures that occurred on his watch." (Executive Summary 5)

We were disappointed with the Report's characterization of Mr. Raines' role in the culture of Fannie Mae. Throughout his tenure, Mr. Raines sought to create a leadership culture that focused on openness and good governance. The Report credits Mr. Raines with having launched "a comprehensive review of Fannie Mae's Board policies and practices with the goal of ensuring that Fannie Mae was 'best in class' in the corporate governance area." (Page 410) The Report concludes that this effort "produced a number of meaningful improvements from a governance perspective." (Page 416) Mr. Raines' problem- solving attitude at the time was well summarized by what a former senior executive reported to the Rudman investigators, "[She] recalled Raines stating, in substance, that if there were any other 'elephants under the table,' that this was the time to 'bring them out,' 'clean them up,' and 'take care of them.'" (Page 49) This approach worked well in the vast majority of situations faced by the company.

Mr. Raines hopes that, as these matters are further explored, the public will also recall the fine work done by thousands of Fannie Mae employees and their industry partners to make the American Dream of homeownership available to millions of families from 1999 to 2004. During that time, Fannie Mae provided $3.4 trillion of housing financing, serving over 30 million low-, moderate-, and middle-income families. The company's revenue, book of business, and economic value more than doubled during this period. Its risk sharing and hedging strategies also worked effectively. The strength of the company was demonstrated by its ability to restore its statutory minimum capital so quickly at the end of 2004.

Fannie Mae has been and should remain an important resource for the nation in meeting its affordable housing goals. Mr. Raines wishes the current leadership of Fannie Mae well as it continues to strive to make housing affordable for all Americans.

Robert B. Barnett is an attorney at Williams & Connolly.

Source: prnewswire

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