Friday, September 19, 2008

McCain's Duberstein Not Only on Board of Fannie Mae, Kept Regulatory Wolves Away

The man who helped John McCain with his 2000 Presidential run and gave advice on his VP selection process, governed Fannie Mae from 1998 to 2007. Not only did he serve on their board during a time of shoddy accounting, to the tune of some $9 billion in restatements, Ken's firm worked for Fannie Mae, advising them on regulatory matters. Their restated 2004 10-K shows Duberstein's firm made over $1,000,000 keeping the regulatory wolves away from Fannie Mae's door over a three year period.

Transactions with The Duberstein Group

Mr. Duberstein is Chairman and Chief Executive Officer of The Duberstein Group, Inc., an independent strategic planning and consulting company. Our contract with The Duberstein Group provides that The Duberstein Group shall provide consulting services related to legislative and regulatory issues, and associated matters. The firm has provided services to us since 1991. During 2004, 2005 and 2006 the firm provided services on an annual fixed-fee basis of $375,000. Mr. Duberstein is a non-independent Fannie Mae director

Ken and the Board replaced a laundry list of leaders to clean things up. It included:

In December 2004, Franklin D. Raines, who had served as Chairman of the Board and our Chief Executive Officer, left his position. Our Board of Directors appointed Daniel H. Mudd as our new Chief Executive Officer. In addition, we have replaced all of our senior financial and accounting officers who served during the period in which we issued the consolidated financial statements that have been restated, including our Chief Financial Officer and Controller, and we hired a new General Counsel, Chief Risk Officer, Chief Audit Executive and Chief Compliance Officer.

What didn't work? Accounting changes, switching auditors, the wholesale replacement of top leadership, all failed. The whole company cratered. Why should the public trust the next clean up to be more effective than the last?

Management, governance and regulatory bodies failed. No matter what each says at the moment, Ken Duberstein and John McCain did their part, rest assured.