Fannie Mae faces more huge losses
March 4, 2005
Mortgage giant's losses could climb to $12 billion
Additional serious Fannie Mae accounting problems recently discovered by federal regulators could mean as much as $2.8 billion in further losses, according to an analysis based on information provided by the mortgage giant.
The Securities and Exchange Commission ordered Fannie Mae in December to restate earnings back to 2001, a correction estimated at $9 billion. Last month, the Office of Federal Housing Enterprise Oversight informed Fannie Mae's board of additional accounting problems.
The anticipated restatement in earnings could climb to nearly $12 billion if the company has to recognize the full additional estimated losses, The Wall Street Journal reported Thursday.
In December 2004, Fannie Mae replaced Franklin Raines, its chairman and CEO, who announced he was taking early retirement, and Fannie Mae's chief financial officer, Timothy Howard, resigned Dec. 21.
The two left in the wake of the SEC directive to make accounting corrections that could knock out some $9 billion of Fannie Mae's past profit. Fannie Mae's financial accounting troubles have drawn shareholder lawsuits and investigations by the Justice Department and the Securities and Exchange Commission.
House Financial Services Committee Chairman Michael G. Oxley (R-Ohio) has pledged to work toward a legislative reform package for Fannie Mae this Congress. Oxley has said that it is necessary to build a regulator for the GSE with the power, independence and funding to confront and handle such matters.
Copyright 2005 Inman News