(Washington, D.C.) – Citizens Against Government Waste (CAGW) today named Fannie Mae Chairman Franklin Raines Porker of the Month for May 2004, following a series of unfavorable revelations about its accounting procedures and executive compensation packages.  Fannie Mae is the largest of the nation’s housing government-sponsored enterprises (GSEs), all three of which have been under increased scrutiny and the subject of calls for stronger oversight.  Fannie Mae carries $1 trillion in assets and benefits from $20 billion in taxpayer-conferred special advantages.

Increasingly deluged with questions about its operations, accounting practices, and lobbying activities, Fannie Mae’s Teflon image is wearing off.  The company’s current regulator, the Office of Federal Housing Enterprise Oversight (OFHEO), is conducting an investigation into the company’s accounting procedures and recently ordered Mr. Raines and the executives at Fannie Mae to recalculate losses on some of the bonds it holds in its $1 trillion portfolio, including $8 billion in securities backed by mobile homes and another $300 million backed by aircraft leases.  At the same time, Fannie Mae is resisting efforts by the Department of Housing and Urban Development (HUD) to increase low and middle-income housing goals for the GSEs.  Though the GSEs spend millions of dollars on ads to burnish their image and tout their commitment to helping low-income families purchase homes, both Fannie Mae and Freddie Mac have consistently lagged the private market in catering to that population.

The latest controversy over Fannie Mae’s accounting procedures comes in the middle of growing unease about the growth and risks associated with all three GSEs: Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System.  Congress is currently grappling with legislation that would impose stronger oversight and more accountability.

In spite of ongoing investigations, calls for tighter oversight, and sub-par performance in meeting its low-income housing mission, Fannie Mae’s Board of Directors saw fit to boost Mr. Raines’ compensation by 46 percent from his 2002 rate of $11.7 million to $17.1 million in 2003.  Mr. Raines’ package included $196,000 in private jet travel and he received more than $37,000 in tax counseling and accounting services at the company’s expense.

The GSEs have special taxpayer-backed advantages, including tax exemptions and lines of credit at the U.S. Treasury, plus an implied taxpayer-backed guarantee, together worth about $20 billion annually, according to the most recent numbers from the Congressional Budget Office.  About one-third of that corporate welfare subsidy, approximately $6.7 billion, is retained by GSE executives and the company’s stockholders.  While Mr. Raines publicly states that he is fully supportive of a stronger regulatory regime, he has directed the expenditures of millions of dollars on an army of lobbyists and public relations professionals to swarm Capitol Hill to weaken and obstruct any attempts at reform.

For administering and defending an impenetrable and questionable accounting regime, for heavy-handed meddling in the legislative process to protect the company’s congressionally-protected status and its lavish corporate welfare program, and for potentially subjecting taxpayers to a massive bailout, CAGW names Fannie Mae Chairman Frank Raines its Porker of the Month for May 2004.

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.