Shame, Shame, Franklin Raines

By Todd Harrison  JUL 17, 2008 11:50 AM

Leaving economic destruction in your wake is shameful.


“The greatest trick the devil ever pulled was convincing the world he didn’t exist.”  Verbal Kint

We’ve located our pal Franklin Raines and, as we've been monitoring the risk in the GSE's for  the last five years, I thought ye faithful would like an update on his whereabouts as Fannie (FNM) and Freddie (FRE) share the spotlight.

Some highlights since he left the helm:

We avoid acrimony in the 'Ville—it's not our style—and I'm trying hard to not break tradition. 

After all, Ruby taught me to take the high road as it's less crowded and boasts a better view.

What I will say is this—shame, shame Franklin Raines. Much like Alan Greenspan was the architect of cumulative imbalances that will burden our children with obligations, you helmed the Titanic and snuck off with the life-vests.

There are two lenses with which to view your legacy.

You knew what you were doing and for that, you should be liable, be it in the court of public opinion or otherwise.

Or you didn't, in which case you had no business running the company and accumulating your fortune.

As policy-makers and politicians point fingers and paint banks with the blame brush, you're enjoying a posh life and lamenting about your legacy.

It seems to me you've gotten off easy and for that you should be thankful. More likely than not, those left in the wake of the housing destruction weren't as fortunate.

To be sure, there is no one person responsible for where we now find ourselves. 

The DNA of this market has been baked in the cake since the back of the tech bubble.

Financial engineering certainly exacerbated the risk.

And, as discussed, many of the big picture blues are now baked in the cake, a necessary evil that will ultimately allow us to build a sustainable foundation for future growth.

We all share responsibility for living beyond our means for as long as we have and that immediate gratification mindset has come home to roost . 

Time, and price, are the only solutions.  The good news, for all of us, is that we've embarked on that process.  After the debt destruction process runs it's course, those who have properly protected capital and armed themselves with financial intelligence will be in a fantastic position to prosper

As for you, kind sir, it's not to late to make a difference and affect positive change. 

Charitable efforts to  help some of the folks who no longer have a roof over their head would be a great place to start.

Redemption, as Warden Norton once noted, lies within.


No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at

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