Fannie Mae investigators plan to complete by year-end an inquiry into an estimated $10.8 billion in accounting errors at the mortgage giant, former U.S. Sen. Warren Rudman, who is heading the probe, told Bloomberg Friday.
“Our timetable is still for having this report with an ’05 date on it, and we’re hoping we can do that unless something else comes up that causes us problems,” Rudman said in an interview Friday in Washington.
Rudman wouldn’t say which month he planned to release the report. Rudman, a Republican from New Hampshire, was hired in September 2004 to lead an investigation after the government-sponsored enterprise’s regulator determined Fannie Mae broke accounting rules.
The Office of Federal Housing Enterprise Oversight last year uncovered accounting violations at Fannie Mae, setting off investigations by the Securities and Exchange Commission and the U.S. Justice Department and several shareholder lawsuits. As a result, the company will have to restate earnings by as much as $12 billion.
In December 2004, Fannie Mae replaced Franklin Raines, its chairman and CEO, who announced he was taking early retirement, and Fannie Mae’s chief financial officer, Timothy Howard, resigned Dec. 21.
Fannie Mae’s financial accounting troubles have drawn shareholder lawsuits and investigations by the Justice Department and the Securities and Exchange Commission.
Freddie Mac, Fannie’s fellow major government-sponsored enterprise, also experienced a management shakedown in 2003 when accounting irregularities surfaced. The company has since restated several past years’ earnings amounting to approximately $5 billion. And The Office of Federal Housing Enterprise Oversight fined the company $125 million.
OFHEO continues to investigate Fannie Mae’s accounting practices.
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