25 May 2006

Corporate Lawbreakers Cost Fannie May $400m

Fannie May was fined $400 million on Tuesday for accounting fraud.

…nearly 8 million pages of documents, details what the [investigation] calls an arrogant and unethical corporate culture. From 1998 to mid-2004, the smooth growth in profits and precisely-hit earnings targets each quarter reported by Fannie Mae were "illusions" deliberately created by senior management using faulty accounting…

"By deliberately and intentionally manipulating accounting to hit earnings targets, senior management maximized the bonuses and other executive compensation... at the expense of shareholders," the report says. The manipulation "made a significant contribution" to the compensation of former chairman and chief executive Franklin Raines, which totaled more than $90 million from 1998 to 2003…

Let me briefly explain why I have such disdain for white collar crime. Unlike street thuggery, white collar crime cannot be explained by malformed psyches resulting from faulty upbringings. White collar criminals generally come from good families, good neighborhoods, etc. Their criminality is pure, unadulterated greed. I see them as poster children for human weakness.

Oh, by the way… speaking of corporate execs, the Banks Working Group (3CDC-2) meets today at 10a.m. at the Freedom Center (public invited).

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