Ofheo Settles With Former Fannie Mae Bosses

Federal regulators settled with former Fannie Mae executives accepting far less in fines than they had originally requested. Former CEO Franklin Raines agreed to donate $2 million to charities and give up stock options that are currently worthless. If my dog dropped a big one in the middle of the living room, I would probably dole out harsher discipline than Ofheo dealt to Franklin Raines. Ofheo initially talked a big game, seeking over $115 million in returned compensation when it went after Raines and his cohorts for allegedly tinkering with FNM's accounting in order to hit certain earnings targets that would trigger fat bonus payments. FNM had to restate earnings for several years, posting huge losses, and the company paid about $400 million in fines. Seriously, the next time I see some CEO compensation consultant on TV justifying enormous CEO signing bonuses and prearranged severance packages because the CEO position contains significant "risks," I'm going to track him down and punch him in the face. Here is a perfect example of how the CEO position is all upside with zero risk. FNM's former executives committed accounting fraud. They paid themselves bonuses on earnings that didn't exist. The company paid a huge fine, the stock was annihilated, and the insurance is going to pay the former executive's fines. Who took all the risk? The shareholders. That's precisely why shareholders should get a say in how much they decide to fork over to their CEOs in compensation. It seems as if public opinion is finally moving in that direction, which may make being a shareholder in a US public company a bit more appealing in the future.