He waited for someone to sit next to him. But the chairs around him were empty, as if he were quarantined. Franklin Raines, the former chief executive officer of the nation’s largest mortgage lender, has become a “pariah,” said one person attending the same meeting.
James Johnson — Raines’ predecessor at Fannie Mae — also is an outcast. When Democratic presidential candidate Barack Obama chose Johnson to serve on his vice presidential search committee, the choice created a firestorm of criticism. Johnson removed himself from the committee.
Critics say Johnson and Raines played key roles in Fannie Mae’s decline. They say the duo and the corporation were brought low by ambition and greed.
There have been others who were overwhelmed by their appetites. They pulled themselves from the ditch and regained the respect of their fellow citizens. Johnson and Raines could do the same while benefiting Washington metropolitan communities.
Think Michael Milken.
In 1989, the “Junk Bond King” was indicted on 98 counts of racketeering and securities fraud. He pled guilty to six counts of security and reporting violations. He was sentenced to 10 years — but served two. After prison, he created the Milken Family Foundation. In 2004, Fortune magazine put him on its cover, calling him “The Man Who Changed Medicine.”
Give-It-Back: That’s a campaign being launched today. It allows people like Johnson and Raines to redeem themselves — a la Milken. Surely they don’t want to be remembered as the folks who caused millions of Americans to lose their homes and life savings. Others, whose wanton disregard of the rules contributed to the global crisis, will be named. (Send in your list of people who should be encouraged to give it back.)
Dig deep and spread the wealth. That’s the message to Johnson and Raines.
First stop: the District — after all, Fannie Mae is located here. The company doesn’t pay local taxes. It left the city in the lurch when it reneged on its pledge to invest in a development project in Southwest. Dozens of nonprofits that receive grants from Fannie Mae are worried about their future. Private donors may not be able to fill the gap — well, except Raines and Johnson.
In 1998, Johnson received $21 million from Fannie Mae. When he left, he received a $600,000 consulting contract. Between 1998 and 2003, Raines earned nearly $90 million.
Can you smell it? The scent of money is thick.
Johnson and Raines couldn’t be reached for comment. In published reports, they have said they did nothing wrong while at Fannie Mae. They probably will insist they gave already to charity. That’s not enough. For the havoc they allegedly wreaked in the subprime housing market, they need to give much more.
They should create the Johnson-Raines Foreclosure Relief Fund.
One fact to motivate Johnson and Raines — in 2007, Fortune magazine listed Milken as the 458th richest person in the world.
Now, that’s redemption.
