Rep. Richard Baker, R-La., said Wednesday that he has referred Franklin Raines and Tim Howard, the two former top executives at Fannie Mae, to the Justice Department and accused them of committing perjury and lying to Congress.
Mr. Raines, Fannie's former chairman and chief executive, and Mr. Howard, its former chief financial officer, testified on Oct. 6, 2004, before a House Financial Services subcommittee that they did not manage earnings to boost executive compensation.
But James B. Lockhart 3d, the acting director of the Office of Federal Housing Enterprise Oversight, testified last week that an investigation into Fannie's accounting scandal found that executives "were precisely managing earnings per share to the one-hundredth of a penny to maximize their bonuses."
In a June 13 letter to Kenneth L. Wainstein, the U.S. Attorney for the District of Columbia, Rep. Baker wrote, "It is my belief that Mr. Franklin Raines and Mr. Timothy Howard, while testifying under oath at a hearing ... failed to testify truthfully in violation of applicable law.
"I request that the Department of Justice conduct an investigation and bring any appropriate prosecution," the letter said.
In a press release, Rep. Baker said the two had "clearly and arrogantly flouted" a responsibility to tell Congress the truth.
He submitted as proof portions of a transcript of the hearing before the subcommittee on capital markets, insurance, and government-sponsored enterprises.
Mr. Raines testified that there "was no decision made to defer any expense from 1998 to 1999" - a key accusation made by OFHEO - and that he did not play a role in determining what the earnings per share figures would be.
When asked by Rep. Barney Frank, D-Mass., whether the two had tried to hit a certain target to boost bonuses, Mr. Raines said, "We both deny that," and Mr. Howard agreed.
