Mortgage Companies Avert Huge Accounting Disasters
Posted on July 11, 2006
Filed Under Mortgage Updates
“A potential financial disaster that could have shaken the housing market was averted because regulators discovered accounting failures at Fannie Mae and Freddie Mac, the new head of the agency that oversees the mortgage giants said Monday. “
“Fannie Mae, the second-largest U.S. financial institution after Citigroup Inc. and the second-biggest borrower after the federal government, is restating its earnings back to 2001 — a correction expected to reach at least $11 billion. The company was fined $400 million in a settlement in May with OFHEO and the Securities and Exchange Commission, one of the largest civil penalties ever in an accounting fraud case. It also agreed to make top-to-bottom changes in its corporate culture, accounting procedures and ways of managing risk.”
When I first heard these stories I immediately thought Enron but it looks as though it was simple accounting mistakes and that nothing was done on purpose. At least that’s how it seems now, but I’m a little untrusting of large companies right now. Let’s check back in a few years.
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