WASHINGTON — Former Fannie Mae chief Franklin Raines and twoother top executives have agreed to a $31.4 million settlement with thegovernment announced today over their roles in a 2004 accountingscandal.

Raines, former Fannie chief financial officer Timothy Howard andformer controller Leanne Spencer were accused in a civil lawsuit inDecember 2006 with manipulating earnings over a six-year period at thecompany, the largest U.S. financer and guarantor of home mortgages.

Raines, a Seattle native and prominent Washington figure who wasPresident Clinton's budget director, is relinquishing company stockoptions, proceeds from stock sales and other benefits. His part of thesettlement is worth $24.7 million,

The stock options were valued at $15.6 million at the time they wereissued to Raines, allowing him to buy shares at $77.10 and higher.Fannie Mae shares have been battered by the turbulence in the housingmarket — making the options that Raines was returning of negligiblevalue, people familiar with the settlement said. They spoke on conditionof anonymity because they did not publicly wish to criticize theaccord."

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