...Investigators found that Fannie Mae's reported earnings per share closely tracked the targets set for executives to receive their maximum bonus payouts....
Fannie Mae’s Johnson Was ‘Pied Piper,’ Drove U.S. Off Housing Cliff: Books
James A. Johnson cuts a powerful figure as he makes his way around Wall Street and Washington in horn-rimmed glasses.
He’s a man of prestige: vice chairman of private-equity firm Perseus LLC; head of the compensation committee at Goldman Sachs Group Inc. (GS); former adviser to Democratic presidential aspirants including, briefly, Barack Obama. ...
...Drawing on more than a decade of reporting, Morgenson and Rosner argue that Johnson laid out a blueprint for other institutions, from mortgage lender Countrywide Financial Corp. to Goldman Sachs. In his lobbying to preserve Fannie Mae’s government ties, Johnson showed bankers “how to control their controllers and produce the outcome they desired: lax regulation and freedom from any restraints that might hamper their risk taking and curb their personal wealth creation.” ...
...Ensconced in its colonial-style headquarters in Washington D.C., Fannie Mae automated its lending process, eliminating traditional due diligence, the authors say. It lowered standards, both on down payments and acceptable ratios between a borrower’s monthly mortgage payment and his or her income, they write. ..
...We’re reminded, for example, of the “deeply symbiotic relationship” between Johnson and Angelo Mozilo, the tanned and French-cuffed CEO of Countrywide, which became Fannie Mae’s largest loan provider. ...
