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Franklin Raines

After serving as a budget director to President Bill Clinton in the 1990s, Franklin Raines succeeded James Johnson as head of the mortgage lender Fannie Mae (Federal National Mortgage Association) in 1999; he would retain that post until 2005. During his six years at the helm, Fannie Mae (along with Freddie Mac, a.k.a. the Federal Home Loan Mortgage Corporation) was heavily involved in making subprime loans to high-risk borrowers -- particularly racial and ethnic minorities -- who failed to meet traditional loan criteria. In 2007, Barack Obama stated that “subprime lending started off as a good idea -- helping Americans buy homes who couldn’t previously afford to.”

As a result of such lending practices, Fannie Mae and Freddie Mac in September 2008 suffered a financial collapse that required a $700 billion government bailout. But Raines, who had overseen those practices for six years, personally pocketed nearly $100 million in compensation before leaving under a cloud of scandal when it was learned that he had manipulated profit and loss reports so as to enable himself and other senior Fannie Mae executives to earn gargantuan bonuses, even as the mortgage lender was imploding. Notwithstanding Raines’ poor track record,
 the Obama campaign consulted him in 2008 for his advice on housing matters.


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