Senator Obama-Do You Know These Fat Cats?

"Meow. It's time for my bailout."


As this financial mess continues to unfold, two government-sponsored companies, Fannie Mae and Freddie Mac have stood out as examples of fixed books and huge executive payouts-even as the companies go under. Barack Obama has repeatedly said that any bailout deal should not benefit "fatcat CEOs" who were largely responsible for creating the scandal in the first place.

I have no problem with that. First and foremost, we can begin with figures like Franklin Raines and James Johnson, both of whom are former CEOs of Fannie Mae-men who ran the company into the ground while walking away with millions in huge bonuses. Surely, Senator Obama must have been thinking about these two characters whenever he spoke out about those "fatcats".

Franklin Raines, described as a "poor kid from Seattle", was formerly an associate director for economics and government in the Office of Management and Budget(OMB)in the Carter Administration. He served as vice-chairman of Fannie Mae from 1991-1996. Subsequently, he became Director of the Office of Management and Budget in the Clinton Administration (1996-1998).

Raines served as CEO of Fannie Mae from 1999-2004, when he took early retirement in the midst of an investigation by the Securities and Exchange Commission (SEC). During his tenure, in 1999, Raines instituted a program to issue bank loans to lower to moderate income persons.

Raines was accused by the Office of Federal Housing Enterprise Oversight (OFHEO)of being involved in widespread accounting errors-including the shifting of losses in order that CEOs (such as himself) could qualify for huge bonuses. Raines reportedly earned some 50 million dollars and was sued by OFHEO for taking money based on inflated earnings. (See article by Charles Whitaker, "Franklin Raines-First Black Head of a Fortune 500 Corporation-Fannie Mae, Ebony Magazine, April 2001).

In 2003, Raines reportedly made over 20 million dollars. He subsequently entered into a settlement by which he kept most of his "earnings".

Fat cat? You make the call.

Then there is Jim Johnson, also a former CEO at Fannie Mae (he left in 1998.) The year that Johnson left, Fannie Mae's profits were allegedly fixed in order to justify top bonus payouts to CEOs (Johnson reportedly got 1.9 million dollars). In his final year at Fannie Mae, Johnson reportedly made 21 million dollars (Report of the Special Examination of Fannie Mae, May 2006).

According to an investigation conducted by OFHEO in 2004, it was during Johnson's tenure as CEO of Fannie Mae that the company improperly deferred $200 million in expenses in 1998 that enabled huge CEO bonuses to be paid out. (See article entitled: "High Pay at Fannie Mae for the Well Connected" by Albert Crenshaw in Washington Post dated 23 December 2004).

Fat cat? You make the call.

So surely, these two guys must be Barack Obama's poster boys when he talks about corporate greed and the need to not reward CEOs who misused their companies, right?

Well, not exactly. You see, Barack Obama does, indeed, have connections to these "fat cats". In fact, Barack Obama is the second-largest recipient in Congress of contributions from Fannie Mae and Freddie Mac to the tune of $126,349. (Center for Responsive Politics).

First, let's go back to Mr Raines. The Washington Post has reported on more than one occasion that Raines has taken calls from the Obama campaign on economic questions, which the Obama campaign denies. The McCain campaign has recently repeated the charge.

As for Mr Johnson, there is no denying the association. Until recently, Johnson was part of the group helping Obama find a running mate. He resigned that position in the wake of reports that he had received personal loans from Angelo Mozilo, CEO of Countrywide Mortgage (involved in the sub-prime lending mess).

Aside from that, Johnson also reportedly served as a "bundler" in the Obama campaign, raking in $200,000-500,000 for the campaign.(Center for Responsive Progress, Sept. 2008.

At any rate, there is an easy way to clarify the relationships between Obama, Raines, Johnson, Fannie Mae, and Freddie Mac. That would be for our mainstream news media folks and/or debate moderators to ask Obama directly the following questions:

Senator, what is your relationship with James Johnson and Franklin Raines?

Did anyone from your campaign make contact at any time with Raines seeking economic advice?

You have reportedly received over $126,000 in contributions from Fannie Mae and Freddie Mac, which makes you the 2nd largest recipient in Congress. How can you criticize "fat cat" CEOs who have ruined their companies in the face of these contributions?

How can you make these criticisms if you, in fact, are associated with Mr Raines and/or Mr Johnson?

And finally this:

Senator Obama, are you yourself a "fat cat"?

So, having given my famous guidance to the media, I will sit back, take the rest of the week off, and wait for our msm to dig into these questions and pose them directly to Mr. Obama. (It certainly shouldn't take long, should it?)