Fannie Mae regulator: We've got trouble
February 24, 2005
New accounting problems ID'd at mortgage giant
Fannie Mae's federal regulator has found new problems with the mortgage giant's accounting practices, including questions with regard to securities and loan accounting, Fannie said Wednesday.
Fannie also said the Office of Federal Housing Enterprise Oversight approved and extended the plan it submitted to restore inadequate capital reserves and raise an additional 30 percent surcharge imposed until its books are in order. OFHEO has extended the deadline for meeting this plan to Sept. 30 from the original June 30 deadline.
Fannie's e-mailed announcement comes in the wake of accounting scandals at both Fannie Mae and fellow GSE Freddie Mac. 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 an 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