FANNIE MAE LAWSUIT

The former chief executive of Fannie Mae, Franklin Raines, used the company’s foundation to compromise the independence of six current board members at the mortgage-finance corporation, according to a lawsuit filed by Fannie Mae shareholders in the U.S. District Court in Washington, reports Bloomberg News. Through the Fannie Mae Foundation, Mr. Raines steered $12-million to the Brookings Institution, the John F. Kennedy Center for the Performing Arts, and other nonprofit organizations tied to the company’s trustees. The lawsuit alleges that those grants discouraged the board members from speaking up about financial malfeasance at Fannie Mae. A spokesman for Fannie Mae and a lawyer for Mr. Raines both declined to comment to Bloomberg. In related news, the Senate Finance Committee last month began an investigation to see if Fannie Mae used its philanthropy to skirt campaign-finance and lobbying laws. Read The Chronicle’s article about the inquiry. (A paid subscription is required to view the Chronicle article.)