Fannie Mae today revealed new financial accounting errors, along with the news that it has hired MCI’s chief financial executive as its chief financial officer and made other staff changes.
In a filing with the Securities and Exchange Commission today, the mortgage giant confirmed that it will have to restate earnings by about $11 billion. Fannie Mae also said its board has appointed Robert T. Blakely as CFO and Mike Williams as chief operating officer, along with other reshufflings.
The government-sponsored enterprise disclosed mistakes in accounting for tax credits and insurance in the filing. Fannie Mae also said filings with the Securities and Exchange Commission will be delayed for a fifth quarter to correct financial reports dating back to 2001.
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.
In today’s SEC filing, Fannie Mae said it incorrectly accounted for Low Income Tax Credit investments that affect the timing of recognition of losses that would result in “more variability from period to period.” It said it also erred in accounting for investments in three synthetic fuel partnerships, though corrections for that won’t have a “significant” impact on its results of operations.
In addition, it said one mortgage insurance policy didn’t transfer sufficient risk of loss to the insurer, and doesn’t qualify for accounting as insurance. Changes will affect earnings for some periods included in the restatement, it said.
Blakely, 63, replaces interim CFO Robert Levin who was named to a new position of chief business officer, Fannie Mae said. Fannie Mae also promoted Mike Williams, who has been with the company since 1991 and was the executive vice president of regulatory agreements and restatement, to chief operating officer.
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