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Business Daily: Fannie and Freddie

24/11/2010

Fannie and Freddie

BBC World Service - Business Daily, Fannie and Freddie

The former boss of US mortgage giant Fannie Mae claims he was made "a ritual sacrifice"

The former boss of US mortgage giant Fannie Mae, Franklin Raines, claims he was made "a ritual sacrifice" after an accounting scandal earlier in the decade.

America's housing market is still in the doldrums. New figures show that home sales were nearly 40% lower in October, than at the height of the housing boom. The BBC's Juliana Liu reports from a part of New York that's become "foreclosure central."

Politicians are worried about the cost of propping up America's mortgage giants, Fannie Mae and Freddie Mac. Between them they guarantee more than half of American home loans, but the companies themselves had to bailed out by the taxpayer after huge losses.

The chief economist of Freddie Mac, Frank Nothaft describes the prospects for a fresh injection of capital into his organisation.

Lesley Curwen talks to Franklin Raines, the former chief executive of Fannie Mae who was the first African American CEO of a Fortune 500 company.

He resigned in 2004, as the sub-prime problem was brewing. Two years later, he was charged with manipulating Fannie Mae's earnings, charges that were later dropped.   

He told Business Daily that he had been made into a ritual sacrifice.

"Bearing that scarlet letter," he said "is no fun, particularly when it's based on a lack of information." And he added, "we don't have a process in the business world where you can run for re-election and be renewed."

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