Case 1:13-cv-00465-MMS Document 96-1 Filed 09/15/14 Page 1 of 5

EXHIBIT 1

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

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Plaintiffs,
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v.
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THE UNITED STATES,
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Defendants.
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___________________________________ )
FAIRHOLME FUNDS, INC., et al.,

No. 13-465C
(Judge Sweeney)

DECLARATION OF J. TIMOTHY HOWARD

IN SUPPORT OF APPLICATION FOR ACCESS TO PROTECTED MATERIALS
Pursuant to 28 U.S.C. 1746, I, J. Timothy Howard, declare and state as follows:
1.

I have been retained by the Plaintiffs to this action to serve as a financial consultant,

and submit this declaration in support of my application for access to Protected Information, as
that term is defined in the Protective Order (Doc. 73) issued by the Court in this case.
2.

I am currently retired, but between 1982 and 2004 I served as a senior officer

and/or director of the Federal National Mortgage Association (Fannie Mae or Fannie). During
my time with Fannie Mae, I served in various capacities, all of which drew upon my economic and
financial expertise. I initially served as Vice President and Chief Economist, and subsequently
served as Senior Vice President of Economics and Planning, as Executive Vice President of Economics, Strategic Planning and Financial Analysis, and then as Executive Vice PresidentAsset
Management. From February 1990 until my employment at Fannie Mae was terminated in December 2004, I served as Fannie Maes Chief Financial Officer, and also was Vice Chairman of
the Board of Fannie Mae from May 2003 until December 2004.
3.

Since leaving Fannie Mae in 2004, I have had no involvement in the operation or

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management of either Fannie Mae or the Federal Home Loan Mortgage Corporation (Freddie
Mac or Freddie). I thus have had no involvement in the 2008 decisions to place both Fannie
and Freddie into conservatorship, and have had no involvement in any subsequent decisions relating to those conservatorships, including but not limited to the 2012 decision to enter into the Third
Amendment to the Preferred Stock Purchase Agreements that I understand is the focus of this
litigation.
4.

I am the author of the book THE MORTGAGE WARS INSIDE FANNIE MAE, BIG-

MONEY POLITICS, AND THE COLLAPSE OF THE AMERICAN DREAM, which was published in late 2013
and which discusses, among other things, my views regarding the historical role of Fannie Mae in
the real estate and financial markets and the causes of the recent financial crisis. In connection
with the publication of my book, I expressed an interest in contributing to the discussion of policy
issues relating to the reform of the mortgage industry.
5.

After I left Fannie Mae, the Office of Federal Housing and Enterprise Oversight

(OFHEO) brought administrative charges against me and two other former executives of Fannie
Mae alleging that we had mismanaged Fannie Maes earnings, failed to ensure adequate internal
controls, and had prepared and released misleading financial reports. While OFHEO never detailed all of the relief it was seeking, it did announce that such relief included civil money penalties
that, according to it, could exceed $100 million, as well as the repayment of certain compensation
packages that exceeded $115 million for all three executives and, in my case, exceeded $25 million. As I understand it, the OFHEO charges would be heard by an administrative law judge who
would issue a recommended decision to the Director of OFHEO. The OFHEO Director would
then have the authority to issue a final decision, subject to limited review in the Court of Appeals.

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6.

In 2008, I agreed to settle the OFHEO charges without admitting any liability or

wrongdoing. Under the terms of the settlement, I agreed to surrender certain stock options, to
donate to a housing-related charity approximately $200,000 worth of Fannie Mae stock that the
OFHEO had to that point refused to release to me, and to make a payment of $750,000, which
payment was fully covered by insurance. While in public statements the OFHEO placed a value
of approximately $5.2 million on the stock options that I relinquished in connection with the settlement, in actuality those options were virtually worthless at the time. OFHEO valued the stock
options at their grant prices, which ranged between $71 and $81 per share; because Fannie Mae
stock at that time traded at approximately $28 per share, the options had no real value, in my
opinion.
7.

Also after I left Fannie Mae, I was a named defendant in a class action securities

fraud lawsuit filed in federal district court. Other named defendants included Fannie Mae, its
auditor, and other Fannie Mae executives. The claims raised in this lawsuit largely tracked many
of the charges alleged by the OFHEO in its administrative action. Following extensive discovery,
I successfully moved for summary judgment and had all of the claims against me dismissed. In
granting my motion for summary judgment, the district court concluded that not only was there no
direct evidence that I had acted with improper intent, there was in fact overwhelming evidence
of my good faith. In re Federal National Mortgage Assn Securities, Derivative, and ERISA
Litigation, 898 F. Supp. 2d 176, 182 (D.D.C. 2012). In my view, and as I stated in my book, the
2012 dismissal of the securities fraud claims against me restored my public identity as career financial executive and risk manager.
8.

During my 22-plus year tenure at Fannie Mae, and my even longer career in the

financial industry, I was often entrusted with sensitive and confidential information. To my

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