The Washington Post is a "pretty flimsy" source of information, two Post hotshots
declared in an effort to diminish a politically uncomfortable association for Sen.
Franklin Raines, CEO of the Federal National Mortgage Association (Fannie Mae) from
1999-2004, is the individual most responsible for the subprime mortgage crisis. It
was on Mr. Raines' watch that Fannie Mae went bankrupt. He was accused of
manipulating earnings statements so he could be paid bonuses to which he was not
In July, Mr. Raines was interviewed by Anita Huslin, a business reporter for the
"In the four years since he stepped down as Fannie Mae's chief executive under the
shadow of a $6.3 billion accounting scandal, Franklin D. Raines has been quietly
constructing a new life for himself," Ms. Huslin's story began. "He has shaved
eight points off his golf handicap, taken a corner office in Steve Case's D.C.
conglomeration of finance, entertainment and health care companies and, more
recently, taken calls from Barack Obama's presidential campaign seeking his advice
on mortgage and housing matters."
Sen. John McCain pounced. In an ad Sep. 18, he said: "Obama has no background in
economics. Who advises him? The Post says it's Franklin Raines, for 'advice on
mortgage and housing policy.' Shocking. Under Raines, Fannie Mae committed
'extensive financial fraud.' Raines made millions. Fannie Mae collapsed.
Taxpayers? Stuck with the bill."
The Obama campaign rushed out statements by Mr. Raines denying he had offered Sen.
Obama advice, and by Sen. Obama denying he had sought it.
Who was the source for Ms. Huslin's assertion that the Obama campaign had solicited
Mr. Raines' advice? Mr. Raines himself.
"I asked Huslin to provide the exact circumstances of that passage," wrote Michael
Dobbs, who writes the Post's Fact Checker blog. "She said she was chatting with
Raines during the photo shoot, and asked 'if he was engaged at all with the
Democrats' quest for the White House. He said that he had gotten a couple of calls
from the Obama campaign. I asked him about what, and he said, Oh, general housing,
But that conversation is "pretty flimsy" evidence, Mr. Dobbs said. "The McCain
campaign is clearly exaggerating wildly in attempting to depict Franklin Raines as a
close adviser to Obama," he said.
Howard Kurtz, the Post's media writer, said: "(Raines) has never been a close
adviser to Obama."
The McCain campaign never said he was. The only description in the ad of the
Obama-Raines relationship is a direct quote from Ms. Huslin's story. To diminish
the impact on Sen. Obama of the disclosure of an unsavory association, Mr. Dobbs and
Mr. Kurtz distorted what Sen. McCain actually said.
The furious efforts of Mr. Dobbs and Mr. Kurtz to spin on behalf of Sen. Obama at
the expense of their own newspaper are hilarious. But they were topped by Karen
Tumulty of Time magazine, who said the McCain ad was "racist" because both Sen.
Obama and Mr. Raines are black.
"Sinister images of two black men, followed by one vulnerable looking elderly white
woman," she wrote.
Proof the ad is racist, Ms. Tumulty said, is because it doesn't mention "a far more
significant tie that of Jim Johnson, the former Fannie Mae chairman who had to
resign as head of Obama's vice presidential search team."
That's because the McCain campaign devoted a separate ad to Mr. Johnson, Mr. Raines'
predecessor at Fannie Mae.
Mr. Johnson and Mr. Raines aren't the only figures in the subprime mortgage scandal
to be connected to the Obama campaign. Jamie Gorelick, rumored to be an attorney
general candidate in an Obama administration, was vice chairman of Fannie Mae from
1997 to 2003. Penny Pritzker, Mr. Obama's national finance chairman, has been
described as "the Michael Milken of the subprime mortage crisis" for her pioneering
of the packaging of bad loans with good ones at her now defunct Superior bank in
"The financial engineering that created the financial meltdown was developed by the
Pritzkers and Ernst and Young, working with Merrill Lynch to sell bonds securitized
by sub-prime mortgages," said Timothy Anderson, a retired bank consultant.
These connections and Mr. Raines' own words contradict the notion he was the
peripheral figure to the Obama campaign Mr. Dobbs, Mr. Kurtz and Ms. Tumulty would
like you to believe.
"I no longer trust the major newspapers or television networks to provide
consistently accurate and fair reporting of all the charges and counter-charges,"
wrote Stuart Taylor in the National Journal Sep. 20.