The plaintiffs in this matter involving the Employee Retirement Income Security Act (ERISA) are state pension fund investors in the Federal National Housing Association (Fannie Mae). The defendants are the United States Government, in its role as the conservator of Fannie Mae, the investment banking firm Goldman Sachs, the accounting firm KPMG, and certain former officers and directors of Fannie Mae, including Franklin Raines, the former Chairman and CEO. Plaintiffs allege that the defendants improperly implemented two Financial Accounting Standards Board (FASB) standards–FAS 91 and FAS 133–in an effort to smooth earnings inappropriately.

Econ One was retained by counsel for Franklin Raines to conduct analyses and perform research while assisting Professor James Barth regarding the role of Fannie Mae’s regulator–the Office of Federal Enterprise Oversight (OFHEO)–in supervising Fannie Mae and overseeing its implementation of both FAS 91 and FAS 133. Donald McCarthy conducted this work which involved: (1) the review and analysis of examination forms and work product produced by OFHEO regarding its regulation and supervision of Fannie Mae; and (2) the review of the regulatory practices of OFHEO and other financial institution regulators including the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. The case is ongoing.