Fannie Mae board, management cited for misconduct

XFN/Forbes ^ | 05.23.2006

[ncountylee]

WASHINGTON (XFN-ASIA) - Fannie Mae's federal regulator said Tuesday the company's executives and board of directors were to blame for the accounting scandal that rocked the big mortgage company, and said the firm must pay a $400 million fine.

A harsh and stinging 348-page report by the Office of Federal Housing Enterprise Oversight said senior management manipulated accounting at the giant company, that Fannie 'stonewalled' government investigators and that Fannie should further probe employees associated with the accounting scandal.

The long-awaited report says Fannie employees manipulated earnings to trigger bonuses for management from 1998 to 2004.

'The image of Fannie Mae as one of the lowest-risk and 'best in class' institutions was a facade,' said acting Ofheo director James Lockhart.

'Senior management manipulated accounting, reaped maximum, undeserved bonuses and prevented the rest of the world from knowing,' Lockhart said.

Ofheo and the Securities and Exchange Commission announced a settlement with Fannie Mae Tuesday in which the firm agreed to pay a $400 million fine to settle the government probe into the mortgage company's conduct. Most of the money will go back to investors, according to the SEC.

Ofheo's report makes 13 recommendations for Fannie, including using independent consultants to verify compliance with the regulator's rules, developing new guidelines for its board, and a 'review' of people who are mentioned in the report. Those people include current CEO Daniel Mudd.

[Mad_Tom_Rackham]

String 'em up.

[ncountylee]

Where are the criminal charges?

[Uncle Hal]

This sounds like jail time to me.

[Nuc1]

Isn't Fannie Mae a federal agency? If so it is a bit ridiculous for the gov to pay a fine to the gov.

[ncountylee]

It's quasi independent. The crook that ran it before was Franklin Raines, who Kerry mentioned as his Treasury Secretary, LOL

[Rodney King]

There will be no jail time and no cover stories on time magazine. The CEO is black.

[masadaman]

Are the directors being sued?

[G L Tirebiter]

They aren't a federal agency - and therein lies the problem. They have leveraged the perception that their obligations are backed by the full faith and credit of the US Treasury (earning themselves preferential treatment in the credit markets) while moving far beyond their original remit. Fannie needs a major overhaul but so many in the DC establishment are at their beck & call that will never happen - until it's too late.

[rottndog]

Where are the criminal charges?

They are in line behind Ted and Patrick Kennedy, Cynthia McKinney, and assorted other Washington D.C. scumbag criminals.

[EyeGuy]

"There will be no jail time and no cover stories on time magazine. The CEO is black."

Exactly, you beat me to it. I'm a Fannie Mae stockholder and this crook should go to jail.

Instead this arrogant black CEO will undoubtedly be celebrated by the liberal media, a fate dramatically different from the white Christians at Enron.

[Mad_Tom_Rackham]

The crook that ran it before was Franklin Raines, who Kerry mentioned as his Treasury Secretary, LOL

Kerry: an empty suit fraud who couldn't find his own ass with both hands. The "cabal" was scraping the bottom of the political barrel with that cowardly puke.

[Mad_Tom_Rackham]

There will be no jail time and no cover stories on time magazine. The CEO is black.

And a Lefty. You are correct, they will circle the wagons, just like they are with Jefferson (D-Crook-LA). In a just world, Affirmative Action Ineptitude and Criminality would be taught in high school and college.

[caisson71]

If we are going to prosecute those involved in the deceit and mismanagement of ENRON, why can't we do it with FNMA? Raines walked away from FNMA under a cloud with a $400 million golden parachute. FNMA is a quasi government agency unlike ENRON which was private. Why isn't anyone going to jail?

[Mad_Tom_Rackham]

They aren't a federal agency - and therein lies the problem. They have leveraged the perception that their obligations are backed by the full faith and credit of the US Treasury (earning themselves preferential treatment in the credit markets) while moving far beyond their original remit. Fannie needs a major overhaul but so many in the DC establishment are at their beck & call that will never happen - until it's too late.

Sounds like another S&L scandal is brewing, with US taxpayers soon to be on the hook for the multi-billion dollar bailout.

[balrog666]

Pay 400 million? To whom? And why not to the stockholders?

[WilliamofCarmichael]

Didn't Jamie Gorelicker (sp?) get big bonuses and bail out of Fannie Mae before its scandals became news?

This thread says yes.

http://www.freerepublic.com/focus/f-news/1310839/posts

She'll be on the commission to investigate Fannie Mae.

[org.whodat]

The crooks should be made to give the money, the Bonuses, back, but I'd say McVaine is working on a amnesty bill at this very moment. Anything for a potential vote.

[rmgatto]

Jamie Gorelick is a partner at Wilmer, Cutler, Pickering, Hale & Dorr . Prior to joining Wilmer, Cutler, Pickering, Hale & Dorr in July 2003, Gorelick was vice chair of Fannie Mae. As part of the four-person Office of the Chairman, she shared responsibility for overall management of the company, directed its efforts to reach underserved markets and oversaw Fannie Mae's external relationships, legal and regulatory affairs. Prior to joining Fannie Mae in May 1997, Gorelick was deputy attorney general of the United States, a position she assumed in March 1994.

[Nuc1]

All by now have concluded that I know absolutely nothing about Fannie Mae which is completely true. So the first question I have is, where does their money come from? I thought they were a Gov mortgage group.