If Fannie Mae were an ordinary public company, the millions of dollars in pay and other compensation that outgoing chairman Franklin D. Raines and other top executives have pocketed over the years would be business as usual.
But like few other companies, the mortgage giant was created by the federal government, carries out a public mission and has an implied government guarantee on its debt offerings.
Thus, the seven- and eight-digit pay packages its executives receive attract more than the usual attention when they come to public notice, as has been the case several times in the past 15 years.
"You are not simply another private corporation," Rep. Barney Frank (D-Mass.) told Raines at a hearing this fall. "There is a lot of government involvement."
Government pay is limited at the top, even for officials who run enormous agencies. The postmaster general, for example, who heads an agency with more than 700,000 employees and more than $65 billion in revenue, is paid about $175,000. And there are no stock options.
Fannie Mae, in contrast, has become over the years a place where former government officials and others with good political connections can go to make millions of dollars.
Raines's total compensation in 2002 was $17.7 million. That year, 19 other top Fannie Mae executives were paid more than $1 million, 12 more than $2 million and nine more than $3 million, according to materials released at a hearing this fall by Rep. Richard H. Baker (R-La.), chairman of the House subcommittee that oversees Fannie Mae. Baker is a leading critic of the District-based mortgage finance company.
Among the Fannie Mae officials on Baker's list was Thomas E. Donilon, the company's executive vice president -- law and policy, who was assistant secretary of state for public affairs and chief of staff to Secretary of State Warren Christopher in the Clinton administration. Donilon received $4.3 million.
Also included was Arne Christenson, who had left the company but before joining it had been a top aide to Newt Gingrich when Gingrich was House speaker. His compensation was listed as $1.5 million. A little down the list was one of Baker's former aides, Duane Duncan, at $920,144.
Raines was a director of the Office of Management and Budget in the Clinton administration, and his name was mentioned as a possible Treasury secretary had Sen. John F. Kerry (D-Mass.) been elected president. Raines's predecessor as Fannie Mae chairman, James A. Johnson, directed Walter F. Mondale's presidential campaign in 1984.
Johnson's compensation when he stepped down in 1998 was $6 million to $7 million a year, it was reported at the time.
Controversies over Fannie Mae's executive pay date to 1991, when David O. Maxwell -- who then was chairman and chief executive officer -- received a retirement package worth $27.5 million. Maxwell, a banker, had been hired in 1981 to turn around a company that had been financially harmed by rapidly rising interest rates, much as many savings and loans were.
Maxwell's pay was attacked on Capitol Hill and elsewhere as inappropriate for the head of a government-related entity, but also defended as a proper reward for a man who had saved the taxpayers from a potentially huge loss.
Johnson publicly defended Maxwell and Fannie Mae at the time, arguing that as a result of his efforts the company was doing well and serving "a public function at no public cost."
But critics and regulators have wondered recently whether the company was being managed more for the benefit of its own executives than its public purpose.
An Office of Federal Housing Enterprise Oversight report in September accused the company of improperly deferring $200 million of estimated expenses in 1998, which allowed management to receive full annual bonuses. Had the expenses been recorded that year, no bonuses would have been paid, the report said.
Fannie Mae reported paying bonuses in 1998 to Johnson, who received $1.932 million; Raines, who then was chairman-designate, $1.11 million; Chief Operating Officer Lawrence M. Small, $1.108 million; Vice Chairman Jamie S. Gorelick, a former deputy attorney general, $779,625; Chief Financial Officer J. Timothy Howard, $493,750; and Robert J. Levin, who was executive vice president for housing and community development, $493,750.
Under the Sarbanes-Oxley Act of 2002, chief executives and chief financial officers are required to give back incentive-based bonuses if the company has to restate its earnings because of financial misconduct. One attorney said yesterday that the law probably wouldn't apply to misconduct prior to 2002. But he said that plaintiffs in a lawsuit could argue that other legal precedents dictate that the bonuses were ill-gotten and need to be returned.