WASHINGTON - The former chief executive officer of Fannie Mae says the Bush administration helped orchestrate an accounting scandal that cost him his job and that he wants to use White House documents to defend himself in a shareholder lawsuit.
Franklin Raines, who served as President Bill Clinton's budget director, argues in court documents that the Bush administration felt the quasi-government agency wielded too much power in the mortgage industry. His attorneys say the White House pushed regulators to weaken Fannie Mae and triggered a $6 billion accounting scandal.
Raines subpoenaed the White House for documents in July. Justice Department lawyers are to go before a federal judge today to fight it.
Relying primarily on articles by financial journalists and the testimony of industry analysts, Raines describes in court documents an unofficial task force dubbed "Noriega" that was formed to weaken Fannie Mae and drive down its stock price.
Fannie Mae is the largest U.S. buyer and backer of home loans. It was created by Congress but is publicly traded. Raines says the Bush administration wanted to undermine confidence in the agency so it could push for tighter government controls.
Raines names as task force members Assistant Treasury Secretary Wayne Abernathy, Associate White House Counsel Reginald J. Brown and members of the National Economic Council. He accuses the task force of influencing an investigation by the Office of Federal Housing Enterprise Oversight.
In 2004, the oversight office released a report detailing widespread accounting errors at Fannie Mae. The scandal swept Raines and CFO Timothy Howard from office and led to a massive shareholder lawsuit. Regulators are also suing Raines and others, seeking fines and the return of millions in bonus money.
Raines believes he can show that regulators were aware of - and approved of - the company's accounting practices until the White House got involved.