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Columbia Journalism Review, May 27, 2008 article





Debits & Credits: the FT Investigates

Welcome to the fight, FT; Awol on Ranieri; counter-intuition discharge, etc.

By Ryan Chittum Tue 27 May 2008 09:55 AM     


Ranieri’s CA record: down the memory hole

A Debit to the financial press for its coverage of Franklin Bank Corporation naming an interim CEO after the company revealed “improper accounting” in its mortgage lending numbers. The company made its chairman Lewis S. Ranieri acting CEO.

It’s interesting news, and The New York Times reported it on its Business Day cover with the angle that Ranieri had been a sort of subprime Cassandra, “warning anyone who would listen that the housing market was about to collapse.”

The Wall Street Journal wrote about it on C2, and gives a bit of background, too, noting that Ranieri was a key figure in the classic Wall Street book “Liar’s Poker” who basically invented the mortgage bonds that led to the current crisis. Reuters mentions that, as well.

But none mentioned a germane piece of data for someone taking over a company in the midst of accounting woes: Ranieri has experience with accounting scandals. He was on the board of Computer Associates when it put itself through its long, crippling ordeal earlier this decade and was nearly shut down by a federal indictment in the $2.2 billion accounting fraud. is the only publication we can find that even mentioned his association with CA (in 2006 it renamed itself like most accounting frauds do).

One big shareholder filed suit last fall against CA alleges that Ranieri and former New York Senator Alfonse D’Amato “knew of and directed the cover-up of the fraud” and that Ranieri specifically met with an executive to tell him to lie. The exec is now in prison.

This is all information that readers should know.




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