Mortgage Giants Agree to SEC Rules
|July 15, 2002|
By Marcy Gordon
AP Business Writer
WASHINGTON ?? Mortgage-market giants Fannie Mae and Freddie Mac have voluntarily agreed to comply with federal disclosure rules as part of the push to make companies more open in the face of accounting scandals, officials announced Friday.
The two government-sponsored yet widely-traded public companies, which are major players in the multi-billion-dollar home mortgage market, have been exempt from the Securities and Exchange Commission requirements.
The move will make them subject to the same disclosure requirements as other publicly traded companies, including filing audited annual and quarterly financial reports to the SEC. It came three days after President Bush delivered a speech on corporate responsibility and amid a capital-wide scramble to restore confidence in the American business community.
Bush met with his new financial crimes "SWAT team" on Friday and the Senate pushed ahead with legislation to create stiff penalties for business fraud and tighten oversight of the accounting industry.
"We're pleased to respond to the president's call," Leland Brendsel, chairman and chief executive officer of Freddie Mac, said at a news conference with SEC Chairman Harvey Pitt and Fannie Mae Chairman and CEO Frank Raines.
Pitt said the companies' voluntary agreement "reflects a commitment to the goals the president has called upon us to meet, and toward which we are all working: exemplary corporate governance, complete transparency of financial information, and full and fair disclosure."
The officers and directors of Fannie Mae and Freddie Mac will have to file reports on their purchase or sale of company stock. The companies will not be able to reverse their decision to comply without the SEC's approval.
Rep. Edward Markey, D-Mass., a critic of how Fannie Mae and Freddie Mac operate, welcomed the move, saying investors in the two companies "deserve to receive the same disclosures as investors in other public companies."
However, Markey said, it was disappointing that the two companies' mortgage-backed securities will not be subject to the disclosure requirements under the agreement.
Congress created Fannie Mae and Freddie Mac to buy home loans from banks and other lenders to supply ready cash to the home mortgage market. They buy mortgages from lenders to keep in their portfolios and package others into securities for sale on Wall Street.
Source: Associated Press