Wednesday, May 24, 2006

Franklin Raines, Another Fallen Role Model

Before embarking on a career in reverse auctions, which begat a career in Global Supply Management, which begat a career in Spend Management with Ariba Inc, I was a Policy Analyst for the United States Office of Management and Budget.

My first day in June of 1996 was Brooking's Scholar Alice Rivlin's last day as Budget Director. Her ultimate successor was an executive who had served OMB earlier in his career and went on to a successful career as an investment banker at Lazard. He came from a modest family background, was an athletic, soft-spoken family man who presided over OMB precisely at the time budget deficits that had been a fact of life since I was in diapers were transitioning to surplus.

At the time I had the opportunity to directly support the Deputy Associate Director, and sit in on meetings with Director Raines, and was always impressed by his even handed manner and insightful questions. Serving the White House in any capacity is an honor, but I also considered it an honor to have served with Director Raines until he left to become the CEO of Fannie Mae at in 1998.

Now he Franklin Raines is practically on the same list as Lay, Kozlowski as a member of the CEO rogues gallery. During his time at Fannie Mae, Mr. Raines took more than $90 million in compensation, that included over $50 million based on the company's ability to hit earnings targets.

Now Fannie Mae will pay a $400 million fine for accounting irregularities that are expected to erase more than $10.6 billion in reported earnings during Raines' 1999-2004 tenure. Earnings that were created through earnings manipulation strategies driven by Raines and former CFO Timothy Howard.

Now the soft-spoken Raines doesn't speak, his attorney does, and there's one less role model I can draw on in my career.

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