Skip to comments.Justice Dept. Opens Fannie Criminal Probe
Posted on 09/30/2004 9:29:54 AM PDT by AdamSelene235
NEW YORK (Reuters) - The Justice Department has opened an investigation of possible accounting fraud at Fannie Mae, the Wall Street Journal reported on Thursday, after a federal regulator said the mortgage giant may have manipulated its earnings targets.
The Journal reported that the investigation is still in the preliminary stages. Fannie has been under fire since the Office of Federal Housing Enterprise Oversight, or Ofheo, accused the company of improper accounting that allowed senior executives to pocket multimillion-dollar bonuses.
According to the newspaper, officials have said that some Fannie Mae executives may have misled regulators, which in some cases would be an added criminal offense. Because of the nature of Ofheo's disclosures, the Justice Department concluded that it demanded an investigation, the Journal added.
Ofheo referred its report to prosecutors last week, lawyers close to the case told the Journal.
The regulator's report raised questions of possible accounting manipulations involving financial instruments used to hedge risk, and expensing of costs associated with the company's core business of buying home mortgages from lenders around the country.
No one was immediately available at Fannie Mae or the Justice Department to comment on Thursday.
This is a nest of Democrat sinecures.
Fannie? My butt!
Wonder if the Texas Rangers, the real rangers not the baseball team, could loaned for the investigation.
A letter to my CongressCritter in case anybody else would like to use it:
The OFHEO recently reported that the Government Sponsored Enterprise Fannie Mae deliberately falsified its earnings in order to pay multi-million dollar bonuses to its executives.
Represenative Baker put it best when he recently stated, "The most disgusting revelation is that accounting tricks were used by a government-chartered enterprise with a government-sponsored public mission and a government-bestowed massive subsidy purely for personal gain and to pad executive compensation," Rep. Richard Baker (R., La.)
These entities have artificially inflated the value of American real estate by pumping ridiculous amounts of easy money into the mortgage market. Now, thanks to the collusion of many members of Congress, the entire financial system is at risk. (see Armando Falcon's OFHEO report on systemic risk).
When will the members of Congress who aided the reckless growth of the GSEs in exchange for campaign funds be held accountable for their actions?
This will be the biggest story of 2005.
The title caused me some concern, I must say. And even some hope for pictures...
Let's hope gorelick get her Just Deserts on this one.
Isn't (or wasn't) 9-11 Commissioner Jamie Gorelick one of the tallest hogs at the trough over at Fannie Mae?
Fannie Mae was also involved in numerous SCAMS with General Developement (now defuct) in the state of Florida. It was part of mass fraud using over valued property appraisals with Fannie Mae's blessing. This was a full blown operation untill around early 1980's.
Cities included Port Charlotte, Port Marion, Port St. Lucie etc.
The democrat albatross.
Nice headline... I'm speechless.
Ugh. Don't start celebrating yet. The fallout could be significant and affect you and I personally.
I came to this thread thinking it was about the
Kerry/Nam wound regarding rice.
Yeah, that's some title. Thank God Reuters thought to put the word "criminal" in there, eh?
THE FANNIE MAE SCANDAL WILL TURN OUT TO BE WORSE THAN ENRON!
THESE PEOPLE MANIPULATED THE ACCOUNTING OF FANNIE MAE IN SUCH A WAY AS TO ALLOW IT TO PAY THE FOLLOWING SALARIES AND BONUSES IN 1998. WHAT THEY'VE BEEN DOING EVER SINCE 1998, ONLY GOD KNOWS!!! THE SCANDAL NVOLVES SOME OF THE FOLLOWING FANNIE MAE EXECUTIVES, MOST CLINTON APPOINTEES:
James A. Johnson, Chairman and Chief Executive, who, beginning in 1968, received $966,000 in salary and a $ 1,932,000 bonus. He is a close Kerry adviser and likely to be Secretary of the Treasury in a Kerry administration!!!
Jamie Gorelick, of 9/11 Commission fame, a Janet Reno lieutenant and advocate of separation of FBI from CIA, etc., that made it easy for terrorists to operate within us. She received $ 567,000 in salary plus a $ 779,625 bonus!!!
Other recipients of this unbelievable largesse with our money:
Franklin D. Raines, Chairman and chief executive designate $ 783,839 in salary and a bonus of $ 1,109,589.
The New York Times and/or The New York Post reported recently that he had cleared $ 20,000,000 this past year!
J. Timothy Howard, Executive Vice President and Chief Financial officer. He received $ 395,000 in salary and a $ 493,750 bonus!!!
Robert J. Levin, who as Executive vice president received $ 395,000 in salary and a $ 493,750 bonus!!!
THE NEW YORK TIMES IS RELUCTANTLY REPORTING THIS SCANDAL IN ITS BUSINESS SECTION, BEGINNING 9-24-04!!!!!
Yeah, LOL... reminds me of that old headline "Prosecutor releases probe into undersheriff..." ;0)
Nice to see that the Justice Department is finally catching a clue.
Nice going........Gorelick and the FM crowd need to be placed under the microscope for those illegal big-buck bonuses.
A lot of people don't realize that Jamie Gorelick is a top rat with Fannie Mae. The link below provides a lot of articles of this rat and Fannie Mae.
I just don't want anyone to forget that name. She needs to join Martha Stewart for some "quiet time" in a jail cell.
Did't Jamie Grelick and Bill Cohen get HUGE Bonuses from Fannie Mae?
I wonder if this will impact interest rates in any way. Or will it simply benefit Freddie Mac?
I hope that she gets pictured on the Rats Wall of Shame with other former elites in jail, waiting for jail and being tried like Martha.
You can get rid of the skunk but you can't get rid of the stench. Raines, Gorelick- still reaking of that Clinton stench.
As a poster on FR used to always say, " The Democrat Party is a criminal conspiracy".
It depends on the severity of the misstatements. If Fannie Mae were discovered to be effectively insolvent, that would be the end of our economy overnight.
Of, course that's the extreme scenario. If Fannie's liquidity (read: ability to buy mortgages so the banks can loan more money to you and me) is affected materially, it will affect interest rates.
I agree, this will be the biggest story of 2005 short of a terrorist event.
It may take a different turn. If Conforming (FMNA, FHLMC) rates increase as a result, the secondary market (subprime) may actually rise to the task since those investors are private and therefore not directly affected. It could be interesting. Normally, those rates are higher, but there have been times even in the last couple years where they've been close on good credit borrowers.
That's very good information to have, Grampa Dave.
Chickens do come home to roost. LOL
If Fannie Mae goes down, the entire US economy goes with it. The crooked Democrats at the top have much more plea-bargain leverage than the Enron execs did - they can turn Bush into Hoover II, just by telling the truth.
If you haven't covered your Fannie yet, now is the time :-)
That's more than just a little bit of on an extreme statement! The same thing was being hollered by extremists when the S&L "crisis" broke right after Carter raised the FDIC insurance to $100K. Liberal/Commonist Democraps keep believing that NOTHING can bring down the very system they hate, including their robbing it and burdening it at every opportunity.
They always fall back on that old worn out tirade: "If Jack Kennedy and the U.S. could send a man to the moon, and we're the richest nation on earth..."
I bought 15 years ago, and converted to a 15 year fixed near the bottom of the rates.
Fire at will, as far as I'm concerned.
So long as you have no exposure to the money center banks, small banks, the dollar, the bond market, money market funds, etc, you have nothing to worry about.
WASHINGTON (CBS.MW) -- Shares of Fannie Mae dropped Thursday as the federal regulator overseeing the mortgage giant said it would increase the frequency with which it issues reports regarding the company's capital.
Fannie (FNM: news, chart, profile) saw its shares trade down $2.29, or 3.4 percent, to $63.96 in recent dealings.
The Office of Federal Housing Enterprise Oversight, or OFHEO, said earlier Thursday it will increase its classification of Fannie Mae's capital to a monthly basis from quarterly one.
The move comes in the wake of the agency's stinging study examining accounting irregularities at Fannie. The monthly reports "will continue until such time as all safety and soundness concerns are fully addressed," OFHEO said.
The heat on Fannie Mae continued to rise Thursday as The Wall Street Journal reported that the Justice Department opened a criminal probe into possible accounting fraud at the company.
Neither the Justice Department nor Fannie Mae would comment on the report. A Justice Department investigation would become the third probe of the company. The Securities and Exchange Commission has opened an informal investigation while OFHEO continues its 8-month-old examination of Fannie Mae's accounting.
OFHEO said Thursday that Fannie and smaller rival Freddie Mac (FRE: news, chart, profile) are "adequately capitalized" as of June 30.
Fannie has agreed with OFHEO to undertake a number of steps to address the findings of accounting problems. The outcome of the investigation may, OFHEO noted, result in a restatement of company earnings and a revision of capital calculations.
A House Financial Services subcommittee has scheduled a hearing for Oct. 6 about Fannie's accounting issues. A Fannie spokesman said Chairman and CEO Franklin Raines and Chief Financial Officer Timothy Howard will both testify.
OFHEO said Fannie's risk-based capital requirement was $24.391 billion as of June 30. With $36.862 billion on June 30, Fannie exceeded its requirement by $12.471 billion. Fannie also exceeded its minimum capital requirement, the agency said.
Freddie also exceeded its capital requirements, the regulator said.
Shares of Freddie dropped 1.7 percent to $65.81.
If the structure is rotten, burn it. Like I said, it's a nest of Democrat sinecures who are particularly in need of burning.
Delay will only delay the reconing, and only a little.
here is another one.
Good letter.....I'm going to copy it and send it out in the morning.
If this turns out to be linked to the Oil for Food probe, it could be called Oil for Fannies! :)
The Coppertone Scandal?
Why is that disgusting or even surprising? The federal government, especially Congress has been the leader in accounting tricks for decades.
Now that's a funny headline!
Justice to Probe Fannie Mae
would have been much better ; )
Interesting title for this article. Hmmm. Fannie probes... yuk.