|  | | 2006 News and Press Releases | | |
HEADLINE NEWS:
Fannie Mae to Restate Results by $6.3 Billion Because of Accounting
Eric Dash
The New York Times. December 7, 2006
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EXCERPT: Fannie Mae, the largest buyer of American mortgages, said yesterday that it would reduce its earnings by $6.3 billion to correct several years of accounting problems in one of the nation’s biggest financial scandals. Federal regulators, meanwhile, said they planned to file a lawsuit before the end of the year in an effort to recover millions of dollars from Fannie Mae’s former top two executives, whose bonuses were tied to the manipulated earnings. Franklin D. Raines, the former chairman and chief executive, and J. Timothy Howard, who had been chief financial officer, were ousted from the company in December 2004, and investigators have laid much of the blame on their shoulders. “We will file charges within the next couple of weeks,” James B. Lockhart III, director of the Office of Housing and Enterprise Oversight, said in a brief interview yesterday. “Unfortunately, the legal process is very cumbersome.” A lawyer for Mr. Raines declined to comment, and a lawyer representing Mr. Howard did not return phone calls yesterday. A Fannie Mae spokesman also declined to comment. The two moves are significant steps in the effort to clean up Fannie Mae — formally, the Federal National Mortgage Association — a company whose influence once reverberated through the corridors of Washington and Wall Street. Over the last two years, though, the company has been mired in scandal. Federal investigators have searched through the company’s records, leading the Securities and Exchange Commission and the Office of Housing and Enterprise Oversight, or Ofheo, to exact a $400 million civil penalty in May. Members of Congress have jousted over the need for a more powerful regulator and for limits on the size of its mortgage portfolio, although a bill may not be passed until at least early in the new year. “We continue to move ahead,” Daniel H. Mudd, who succeeded Mr. Raines as Fannie Mae’s chief executive in 2004, said in a statement. |
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