Dollars and Jens
Wednesday, January 19, 2005
things go wrong
If you can't take pleasure in human misery, where can you take pleasure?
Fannie Mae on Tuesday slashed its stock dividend in half to raise money to help it comply with new capital requirements imposed on the mortgage finance provider in the wake of an accounting scandal.Fannie Mae's debt-to-equity ratio is in the high double digits, and, while trying to get Congress not to remind investors that the government doesn't guarantee its debt, it has been trying to expand the scope of its business. Pride, it seems, goeth before destruction. Don't feel too bad for Franklin Raines, though; he gets a $111,000 monthly pension....
The company is facing possible fines or disciplinary action from the SEC and Department of Justice amid an extensive investigation into Fannie's accounts by its regulator, which resulted in a directive to restate earnings and the departure of its chief executive officer, Franklin Raines, and its chief financial officer, Timothy Howard. Fannie has already raised some extra capital by selling $5bn of preferred stock in December but some analysts have estimated its total capital shortfall at $12.5bn.
Some people aspire to such riches; me, I simply aspire never to having stock in a company jump 12% on the announcement of my resignation as its CEO.
Scott Livengood has cut the fat and carbs from his professional life: He resigned from his posts as chief executive, chairman, and president at Krispy Kreme Doughnuts. The company, overshadowed by investor lawsuits, is under a regulatory microscope for its policies on franchise buybacks and earnings forecasts.By which is meant that he arranged for franchises to be bought, by the company, from friends of his, for much more than they were worth.
Livengood was replaced as CEO by Stephen Cooper, who most recently shepherded the Enron Corp. bankruptcy reorganization.A specialist in turnarounds, presumably, being better for the shareholders than a specialist in embezzlement.
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