Players Line Up Legal Counsel in Fannie Mae Case

As the Justice Department commences a criminal probe into accounting practices at mortgage lender Fannie Mae, the parties involved are retaining some of Washington's top attorneys.

Fannie Mae confirmed the Justice Department's investigation in a Securities and Exchange Commission filing, just days after executives testified before Congress that no wrongdoing had occurred, Dow Jones Newswires reported.

The U.S. Attorney's Office for the District of Columbia told Fannie on Friday not to destroy key documents "relating to matters discussed in the (Office of Federal Housing Enterprise Oversight) report," Dow Jones reported, referring to the scathing OFHEO 211-page review of the company's accounting practices, accusing executives of manipulating earnings to hit analysts' targets to maximize their annual bonuses in at least one instance.

The lawyers are lining up to do battle in cases involving shareholder lawsuits against Fannie, OFHEO charges and the Justice and SEC investigations. Fannie has hired two of Enron's top defense firms to deal with the current crisis-Wilmer Cutler Pickering and Skadden, Arps, Slate, Meagher & Flom-and has several other top firms on regular retainer. Company spokespeople declined to name them all, Dow Jones reported.

Fannie has also retained high-profile white collar criminal defense attorney Robert Bennett at Skadden Arps, who led the firm's work in defending Enron Corp. and HealthSouth Corp. Bennett is probably most famous for his work defending former President Bill Clinton against sexual harassment charges levied by Paula Jones, Dow Jones reported.

Franklin Raines, Fannie's chief executive, has engaged Robert Barnett of Williams & Connolly to represent him personally, Dow Jones reported, adding that Barnett counts among his clients Bill and Hillary Clinton, Madeleine Albright, Queen Noor of Jordan and James Baker, to name a few.

Fannie's board of directors has also retained counsel, former Senator Warren B. Rudman, Republican of New Hampshire, who is now a partner in Paul, Weiss, Rifkind, Wharton & Garrison, to lead an independent investigation into OFHEO's allegations, Dow Jones reported.

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