A $40 Billion Scandal the Media Overlook

The media reporting on Enron was aggressive from day one. As well it should be. But another huge corporate scandal rife with political connections has been virtually ignored by the media: the $40 billion Fannie Mae fiasco, presided over by Clinton alumni like Franklin Raines and Jamie Gorelick. Today the Washington Times ran an op-ed by the MRC's Business & Media Institute Director Dan Gainor about the media's double standard. Dan's piece is on page A18 of the print edition, and available on the Web here.

Here's a taste:

When most people hear the word "Enron," they mentally complete the phrase by adding the word "scandal." As reporter Lester Holt of NBC's "Today" put it in a Jan. 1 story, "Enron has been the poster child, if you will, of corporate scandals."

It isn't the only one, though. There's $40-billion scandal with most of the same elements -- even connection to prominent politicians. Just don't expect to see much about it on TV. After all, the top people involved here are Democrats.

Welcome to Fannie Mae, the government-sponsored mortgage giant. As part of a scandal that's been running nearly two years, Fannie Mae has "misstated earnings" to the tune of $10.8 billion. That's some tune.

So far, the Fannie fiasco has cost Chief Executive Officer Franklin Raines and several other top executives their jobs. The stock has dropped from nearly $80 a share to around $50 -- roughly $30 billion in lost value. And the company recently settled with the federal government and agreed to pay $400 million in fines, stemming from allegations the firm fiddled with the books to ensure bigwigs got performance bonuses.

To top it off, the Fannie Mae leadership was quite well-connected in D.C., especially to the Democratic Party. The Washington Post on May 23 made this all clear in black and white. The front page of that day's Business section showed how James A. Johnson, a former campaign manager for Walter Mondale's presidential run, had created "a political powerhouse."

Ken Shepherd
Ken Shepherd
Ken Shepherd is the Managing Editor for NewsBusters