The Office of Federal Housing Enterprise Oversight Director James Lockhart today announced the issuance of three Consent Orders dealing with former Fannie Mae CEO Franklin Raines, former CFO J. Timothy Howard and former Controller Leanne Spencer.
According to a release from OFHEO, the orders require certain actions by these three individuals as well as settles OFHEOs administrative enforcement actions against them. The enforcement actions were based on 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 agreed 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 respondentsundertook inappropriate earnings management as well as failed to ensure that adequate internal controls were put in place, among other charges. The charges concluded that these allegations could be treated as misconduct and unsafe and unsound practices leading to losses suffered by the GSE.
OFHEOs mission is to ensure that the Enterprises operate in a safe and sound manner, Lockhart said in the OFHEO release. 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.
The Notice of Charges is seeking an order to cease and desist, civil money penalties, disgorgement, reimbursement and other relief from the former Fannie Mae officials.