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- Pilot House goes smoke-free (4/23/17)10
- Woman battered after smashing boyfriend's meth pipe against wall, police say (4/25/17)
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- Cape couple turns their home into cozy, comfortable music venue (4/24/17)
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- Without city record, Marie Street residents on hook for thousands in sewer repairs (4/19/17)7
- Sikeston man charged in shooting death of Cape man (4/23/17)
Fannie Mae violated accounting rules
WASHINGTON -- A review by the Securities and Exchange Commission found that Fannie Mae had violated accounting rules, and the mortgage giant has been told to restate its earnings.
SEC chief accountant Donald Nicolaisen, in a statement Wednesday, said the government-sponsored company's accounting for 2001 through mid-2004 "did not comply in material respects" with accounting rules for derivatives, financial instruments used to hedge against interest-rate swings, and for some transactions related to loans.
The SEC has been investigating the accounting of Fannie Mae, which finances one of every five home loans in the United States. Fannie Mae said last month that if the agency found that it had improperly accounted for derivatives, it would show an estimated net loss of $9 billion for the third quarter.
Fannie Mae spokeswoman Janice Daue had no immediate comment Wednesday evening after Nicolaisen's statement was released.
In September, regulators in the Office of Federal Housing Enterprise Oversight cited Washington-based Fannie Mae for serious accounting problems and accused the company of earnings manipulation. The regulators had ordered Fannie Mae to complete massive recalculations, and the delay fueled speculation as to whether the company would restate earnings.
Company chief executive Franklin Raines and Chief Financial Officer Timothy Howard defended the company's accounting in sworn testimony at a congressional hearing in October and rejected the regulators' allegations of accounting improprieties and management misdeeds going back to the late 1990s.
Fannie Mae last month missed an SEC deadline for filing its third-quarter financial results after its independent auditor KPMG refused to sign off on the report. The company also acknowledged that some of its accounting practices don't comply with generally accepted accounting principles.
A restatement could lead Fannie Mae's board to shuffle the company's executive ranks.
Fannie Mae and its smaller sibling Freddie Mac pump money into the home mortgage market by buying and guaranteeing repayment of billions of dollars of home loans each year from banks and other lenders, then bundling them into securities that are resold to investors. Their stock and debt are widely held by investors around the world.
On the Net:
Fannie Mae: http://www.fanniemae.com
Securities and Exchange Commission: http://www.sec.gov
Office of Federal Housing Enterprise Oversight: http://www.ofheo.gov
Freddie Mac: http://www.freddiemac.com