Judge Dismisses Raines's Attempt To Subpoena White House Records

A federal judge yesterday quashed former Fannie Mae chairman Franklin D. Raines's effort to subpoena records from the White House for use in his defense against an investor lawsuit accusing him and the company of securities fraud.

U.S. District Court Judge Richard J. Leon said he was not convinced that a search of White House records would turn up evidence relevant to the case.

The lawsuit seeks to hold Raines responsible for losses shareholders suffered as a result of accounting problems at Fannie Mae. The suit is based in part on allegations by federal regulators.

Since the Office of Federal Housing Enterprise Oversight first accused Fannie Mae of improper accounting three years ago, the District-based mortgage funding company has acknowledged overstating past profits by $6.3 billion.

Raines's attorney Kevin M. Downey argued that White House records could show there was a coordinated plan within the Bush administration to depress Fannie Mae's stock price. Raines could use such evidence to question the regulators' motives and offer an alternative explanation for investors' losses.

"The Documents Mr. Raines Seeks Are Critically Relevant to His Defense," Raines's legal team argued in a recent court filing.

Raines's claim about the White House was based partly on a 2004 report by investment analysts in which Rep. Barney Frank (D-Mass.) was quoted as saying the administration was trying to pressure Fannie Mae and its competitor Freddie Mac into accepting regulatory changes.

Raines also cited a Fortune magazine article that said administration aides jokingly referred to their assault on the companies as "Noriega," a reference to the military's use of loud music to bombard the former Panamanian dictator Manuel Noriega into submission.

Downey said he has subpoenaed records from a reporter, whom he did not name. He said the reporter is fighting the subpoena.

The judge said Downey could try to revive his White House subpoena if he finds stronger proof for his theory.

"Leave the chicken in the oven. Let it cook a little longer. See what you come up with," Leon said from the bench in Washington yesterday.

The judge said he was influenced by a letter to a member of Congress from the current OFHEO director, James B. Lockhart III, who wrote that officials involved in the probe of Fannie Mae's accounting said they had not encountered White House interference.

The government argued that complying with Raines's subpoena would create a heavy burden for the White House and that Raines failed to meet the high standards required to subpoena presidential records. In support of the government's position, Justice Department lawyer Carl J. Nichols yesterday cited the Supreme Court decision in a landmark case over access to records of an energy policy task force led by Vice President Cheney.

Nichols said the issue in the investor lawsuit is not what the White House might have done but rather whether the defendants violated securities laws.

"Mr. Raines's allegations of a White House conspiracy to influence OFHEO's special examination out of animus towards Mr. Raines and Fannie Mae, while highly entertaining, are simply not relevant to the claims asserted by plaintiffs in this action," the Justice Department said in a legal brief.