Corp-Ethics Home
Log In | Register New User
Home Company Search Related Articles Forum (new!)

Company Fannie Mae [Company Info]
  Track this Company (an email will be sent to you everytime a report is filed about this company)

Date Issue Title
20th Jun 2003 Fraud Investigation Fannie Accounting

NEW YORK (Reuters) - Franklin Raines, chief executive officer of Fannie Mae, the nation's largest home mortgage finance company, said it does not face the same accounting questions as its smaller rival sister Freddie Mac.
On June 9, Freddie Mac replaced its top three executives over an accounting probe about how the No. 2 U.S. mortgage finance company manages its $1.29 trillion portfolio of assets using derivatives to hedge interest rate risk.

In an interview with Business Week Magazine, Raines said he did not know much about the way in which Freddie Mac operates, but when it came to accounting for derivatives, "(Fannie Mae) maintain(s) strict control over what kind of derivatives can be used and our accounting for them."

"We are compulsive about managing risk," Raines told the magazine.

Raines said the idea that problems at Freddie spell problems at Fannie is not true. He also dismissed the idea that regulations need to be beefed up in order to catch accounting problems.

"This is more of a governance and management-control question than a regulatory question," Raines said, adding he did not think Congress will take any regulatory action against Fannie Mae.

Raines said Fannie Mae's size and scope, with over $6 trillion in mortgage debt outstanding now, is vital because it is able to "manage and disburse risk in ways that smaller institutions cannot."

Freddie Mac is now planning to restate its books. This stems from how Freddie Mac applied some accounting rules on the derivatives it uses to hedge interest rate risk, and may largely boil down to a difference of opinion between auditors.

Fannie Mae's FNM.N stock closed on Thursday at $70.90 compared to $74.94 in the session prior to the June 9th announcement. Freddie Mac's FRE.N stock ended Thursday's session at $51.35 versus $59.87 prior to the announcement.

Also on Thursday Fannie Mae sold $2 billion worth of debt, with heavy amounts of buying from investors based in Asia.

Other Reports on Fannie Mae
Date Issue Company Report
22nd Dec 2004 Other Issue Fannie Mae Senior Fannie Mae bosses resign
16th Dec 2004 Questionable Practice Fannie Mae Fannie Mae 'should restate books'
24th Sep 2004 Fraud Investigation Fannie Mae Fannie Mae in government probe

Related Reports from the Financial Industry
Company Issue Report
Morgan Stanley Fraud Investigation Morgan Stanley hit by record fine
Deloitte & Touche Fraud Investigation Parmalat auditors to stand trial
KPMG Fraud Investigation KPMG fined $456m for tax misdeeds
NYSE Fraud Investigation US exchange sued by pension fund
American International Fraud Investigation AIG boss gave wife $2bn in shares
Contact Us | Terms of Service | Privacy Policy | Add Report | Links
© 2006 | Corporate Ethics