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A Fox In The Hen House?
by Rob Kirby, Catherine Austin Fitts & Ole Bear, Editor
December 23, 2004

Associated Press – Two Top Execs at Fannie Mae Forced Out
The Street.com – Raines Falls at Fannie Mae
Washington Post – Fannie Mae’s Top Executives Leaving Firm
Bloomberg.com -- Fannie Mae Fires Raines After Accounting Mistakes
Associated Press – Fannie Mae’s Accounting Crisis
Northern Trust [Paul Kasriel] – Flow-of-Funds Stocking Stuffers

8,000,000 Shares of Fannie Mae Trade at 4:29 PM After Market Close
December 21, 2004:

Date Volume

Data compliments of: www.Stockhouse.com

The data set above includes daily trading volumes for Fannie Mae [FNM] on the New York Stock Exchange for the past 20 trading days.

I would now like to bring the reader’s attention to a snippet of “off exchange” electronic trades conducted outside NYSE trading hours on December 21, 2004 between the hours of 16:00 and 17:49 [4:00 PM – 5:49 PM], after the NYSE has ceased trading for the day:

17.49   $ 70.35 200
16.44   $ 70.35 1200
16.29   $ 70.35 8000000
16.10   $ 70.35 3700
16.10   $ 70.35 1400
16.10   $ 70.35 1200
16.10   $ 70.35 400
16.04   $ 70.35 28200
16.04   $ 70.35 39800
16.00   $ 70.43 100
16.00   $ 70.42 2100
16.00   $ 70.46 100
16.00   $ 70.46 100
16.00   $ 70.46 400

Now dear readers, assuming you are able to read and comprehend the above trades, I would like to draw your attention to one particular trade of an even 8 MILLION shares of FNM transacted at a price of 70.35 [Five Hundred Sixty Two Million US Dollar Transaction] at 4:29 PM. Please note that in the past 20 trading days the total daily volume of FNM transacted on the NYSE has only exceeded 8 million shares 3 times.

Now I would like to draw everyone’s attention to a news release:

Associated Press
Two Top Execs at Fannie Mae Forced Out

12.21.2004, 07:44 PM

The chief executive and top financial officer at mortgage giant Fannie Mae have been forced out, congressional and industry sources said Tuesday, as the nation's second largest financial institution struggles to deal with revelations of auditing improprieties.

Chief executive Franklin Raines and chief financial officer Timothy Howard were forced to resign, according to congressional and industry sources who spoke on condition of anonymity, as federal officials intensified their investigations into revelations that the company will probably be forced to restate $9 billion or more in earnings over the past four years…

So folks, the CEO [Raines] and the CFO’s [Howard] resignations were made public, as per the time stamped AP story cited above, at 7:44 PM on the evening of Dec. 21, 2004 after the market close, and it appears well after 4:29 PM? My question to you, dear reader, is who was transacting FIVE HUNDRED SIXTY TWO MILLION US DOLLARS worth of FNM stock – off exchange in the under reported electronic market -- mere hours before this announcement right after the market close at 4 PM Eastern Time? Martha Stewart spends her Christmas Holidays in the slammer as a result of charges brought against her for allegedly transacting a couple of thousand shares of Imclone with insider knowledge. Does this unreported [so far] minor 8,000,000 share FNM [Fannie Mae] incident make a complete mockery of the SEC and the NY Attorney General’s office?

Is the public owed an explanation? Will anyone else in the main stream financial press find this newsworthy? Is this the epitome of an egregious trading irregularity that at bare minimum begs for a transparent investigation?

Rob Kirby
Toronto, Ontario, Canada

Why should you care what happens at Fannie Mae?

TO THE SOLARI ACTION NETWORK
December 21,2004

Why should you care what happens at Fannie Mae? Fannie Mae is one of the largest financial institutions in the world. If you have money in a money market account or in a mutual fund, you may have money invested in their securities. If you have a pension fund, your pension fund may have money invested in their securities. If you financed your home with a mortgage, your mortgage may have been financed through Fannie Mae. Troubled finances at Fannie Mae could spell problems for the US Dollar and the US Treasury and have domino impact on the mortgage market -- including how much it costs to finance your home or apartment.

On a more personal note, Franklin Raines, the CEO just ousted, was the head of OMB [Office of Management and Budget] when Hamilton Securities and I were targeted. His office actively failed to protect Hamilton and the team of honest officials at HUD. The President's Council of Integrity and Efficiency at OMB was the authority to prevent abuse by Inspector Generals including Susan Gaffney, Inspector General of HUD. The Judge, Stanley Sporkin, who was so instrumental with Gaffney and the Department of Justice Civil Division in targeting us is now advising the Administration in the oversight of Fannie Mae. [Editor’s Comment: Another Fox Guarding the Hen House?]

Fannie Mae and Raines are now under criminal investigation by the Securities and Exchange Commission, where Sporkin once served as head of the enforcement division.

For more on Stanley Sporkin, see the Sporkin Hotseat at:
http://www.whereisthemoney.org/hotseat/stanleysporkin.htm

Catherine Austin Fitts [former Assistant HUD Secretary]
President, www.solari.com
See Also: www.solariactionwork.com
Hickory Valley, Tennessee

Dean Martin Roasts and Falling on Your Royal Fannie

Never in my wildest dreams when I penned When It Raines It Pours or the Dean Martin “Roasts” as a Realty Reality Recommending Reading December 21, 2004 would I have believed that the Fannie Mae CEO would be out of a job at Fannie Mae on the same day. We have provided links to the continuing saga of the lack of transparency at Fannie Mae in the beginning of our joint authored essay. Now the CNBC is getting into the act having interviewed Congressman Richard Baker from Louisiana. CNBC, where have you folks been since 1995? Mr. Insana, Fannie Mae has been under-capitalized for quite some time – Welcome to Reality, Ron, Ole Buddy! 

8,000,000 shares of Fannie Mae trade after the market closes. That’s surreal! Miss Fitts points out a very astute observation that many mutual funds are invested in Fannie Mae holdings. If folks think their money market account is just in cash alone, folks may want to call their broker and find out. We have numerous links in Realty Reality to Miss Fitts and her dangerous world of following the money trail.

Mr. Kasriel’s Flow-of-Funds Stocking Stuffers linked above is a great read. It is like the ice cream on hot apple pie right out of the oven. Housing Bubble, Real Estate Bubble, Debt Bubble, Consumer Spending Bubble? Fannie Mae causing destabilization in the national housing market? Not according to Greenspan since all real estate markets are local, thus cannot be markets bubbles.

Given the lack of transparency at Fannie Mae and the other GSEs, we suspect the losses at Fannie Mae to well exceed $9 Billion in chump change. What’s lurking in their loan loss portfolio will certainly provide more dead kitty kats thrown out there on the table with the blood I see first hand on the streets of Central Missouri – as one foreclosure after another re-sells below the appraisal reports I am asked to review. We suspect financial fudge at Fannie Mae will spill over to some of the Big Boy Lenders who run and rig their own appraisal management companies putting lender client pressure on the realty valuation community to hit the number to make the deal. Taxpayers, get out your check books! What an absolute mess!

Ole Bear
Editor for Realty Reality
Columbia, Missouri

© 2004 Realty Reality