The mess at Democrat controlled Fannie Mae actually started with James A. Johnson. Franklin Raines simply carried on what Johnson had already put in place. Johnson successfully manipulated Congress (donations to Barney Frank) in getting the capital reserve requirement lowered from the 10% normal for banks to 2.5% thus allowing him to massively increase the size of Fannie's portfolio resulting in huge bonuses for himself and other Democrat execs on staff. Johnson also effectively gutted the oversight agency by the same means. Johnson currently sits on the board of Goldman Sachs. That's right, the same Goldman Sachs that was visiting former executive Rahm Emanuel at the White House every day despite being under investigation by the SEC.