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Raines' Last Fannie Check

The former CEO settles and employment dispute.


Fannie Mae


CEO Franklin Raines, who resigned amid the cloud of an $11 billion accounting scandal, will get $2.6 million from his former employer in the settlement of an employment dispute.

The government-sponsored mortgage finance firm disclosed the settlement with Raines in a regulatory filing late Tuesday. The settlement stems from an arbitration Raines filed against Fannie Mae in September 2005 concerning the effective date of his resignation.

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Raines, before joining Fannie Mae, was a director of the federal Office of Management and Budget in the Clinton administration.

Raines and former finance chief Tim Howard stepped down at the end of 2004 after the Securities and Exchange Commission's chief accountant ruled that the company's books were cooked. The arbitrator hearing the dispute ruled that the effective date of Raines' retirement was June 22, 2005 because of the way his employment contract was structured.

In May, Fannie Mae paid a $400 million fine to settle a series of regulatory investigations and into allegations that the mortgage company manufactured some of its earnings.

Fannie Mae is in the process of restating its books going back several years to fix some $11 billion in accounting errors

Earlier this year, federal prosecutors said they would not file any criminal charges against Fannie Mae. But last month, James Lockhart, director of the Office of Federal Housing Enterprise Oversight, which regulates Fannie Mae, said he might file a civil suit against Raines and Howard.