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.
ROTFLMAO!
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.
http://search.yahoo.com/bin/search?p=Gorelick%20Fannie%20Mae
JAMIE GORELICK.
I just don't want anyone to forget that name. She needs to join Martha Stewart for some "quiet time" in a jail cell.
Fannie probe?
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.
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