Federal regulators continuing to pore over Fannie Mae's books have uncovered additional accounting irregularities. The questions on accounting, in addition to those uncovered last year that forced Fannie Mae to restate its earning by $9 billion over three years, could make it harder for Fannie Mae to reach its goal of increasing capital reserves by $5 billion by June.
When the accounting scandal hit the No. 1 buyer of U.S. mortgages December 2004, CEO Franklin Raines and CFO J. Timothy Howard got the boot.
The accounting mess last year and the latest additional problems were uncovered by the Office of Federal Housing Enterprise Oversight, Fannie Mae's regulator. Fannie Mae released the news of the latest problems deep into a press release that merely updated the yearlong probe. OFHEO said the additional problems related to "securities accounting, loan accounting, consolidations, accounting for commitments, and, practices to smooth certain income and expense amounts."
An eight-month investigation by OFHEO, which crested in September, found serious accounting problems at the government-sponsored company as well as a pervasive pattern of earnings manipulation and lax internal controls. Fannie Mae shares, which have been battered in the weeks since its accounting crisis came to light, fell 64 cents to close at $57.16 on the New York Stock Exchange, its lowest level in more than four years and 30 percent below its high of $80.82 a year ago.
"We're getting a broader, more detailed understanding of the specific accounting issues, but I don't see this as anything new," said Bert Ely, a banking consultant in Alexandria, Va., and longtime critic of Fannie Mae. In its statement, the company said its board and management "are addressing the issues and questions."
http://www.nypost.com/business/22094.htm With NY Post wire services
There should be Capitol Hill hearings - no? (PROFITS no one can even imagine...)