(this is starting to get old; but anyway …)
Welcome to Housing Doom blog, proud sponsor of the Karl Rove Memorial
SMEARFEST ‘08
Before they read my old post (below), conspiracy fans will also want to check out the following fine sources:
"Ms. Information: Democrats continue to cover up their relationship with Fannie Mae, and the media plays along", by Stephen Moore, Wall Street Journal, October 19, 2008.
"Murtha’s Freddie/Fannie Distortions", by Brian Faughnan, Weekly Standard, October 16, 2008.
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UPDATE: October 6, 2008
For a few weeks Housing Doom has been getting hammered with hits apparently coming out of any number of spam e-mails and posts claiming that Frank Raines and some of his colleagues are presently serving under candidate Obama. We have no information on this one way or the other; however, …
There’s a Snopes page on the issue and presuming they can be trusted, which seems a fairly safe bet unless something fresh comes up in a media outlet with a reputation to lose, they probably should get the final word on the issue.
Claim: Three former Fannie Mae executives are linked to the Obama campaign as chief economic advisors.
Status: False.
END UPDATE
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Hat tip to L for spotting this news release [1] earlier today announcing that the US (in the person of F&F’s regulator OFHEO) would be pursuing civil charges against three former Fannie Mae executives.
“The 101 charges reveal how the individuals improperly manipulated earnings to maximize their bonuses, while knowingly neglecting accounting systems and internal controls, misapplying over twenty accounting principles and misleading the regulator and the public. The Notice explains how they submitted six years of misleading and inaccurate accounting statements and inaccurate capital reports that enabled them to grow Fannie Mae in an unsafe and unsound manner. The misconduct cost the Enterprise and shareholders many billions of dollars and damaged the public trust,” [OFHEO Director] Lockhart said.
As of 6:30 PM Phoenix time, there were over 180 articles on this stories in this Google News cluster. Long time Doom readers may recall this July 24th post singling out whistleblower and former Fannie accounting manager Roger Barnes as key to uncovering the questionable accounting that has now brought forth serious charges against Frank Raines, Tim Howard, and Leanne Spencer.
Below is listed a few of the stories arising out of today’s events.
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Notes and References
[1]: News Release: "OFHEO FILES NOTICE OF CHARGES AGAINST FORMER FANNIE MAE EXECUTIVES FRANKLIN RAINES, TIMOTHY HOWARD AND LEANNE SPENCER - Charges Seek Restitution, Civil Money Penalties", OFHEO, December 18, 2006.
[2]: "Feds charge former Fannie Mae execs with manipulating earnings: More than $215 million in civil penalties, restitution sought", by Matt Carter, Inman, December 18, 2006. Doom reader L found this article too.
Lockhart said the investigation into management and accounting practices at Fannie Mae and Freddie Mac predated the introduction of the bill to make OFHEO an independent agency with powers similar to that of federal banking regulators. The bill has stalled over the issue of placing tighter limits on Fannie and Freddie’s loan portfolios. Lockhart told reporters during a press conference he is confident that a compromise bill will be approved early next year.
[3]: "OFHEO sues ex Fannie Mae execs over accounting", by Patrick Rucker, Reuters, December 18, 2006.
Of Raines’ $91 million compensation between 1998 and 2003, over $84 million was tied to earnings per share targets and faulty accounting, OFHEO said. Of Howard’s $31 million compensation during those years, $27 million was on top of his salary during those years while Spencer earned over $5.6 million of her $7.3 million compensation with those on-top-of-salary payments.
…
"Today’s complaint is a work of unsubstantiated fiction," said Steven Salky, Howard’s attorney. "We are eager for a fair and impartial adjudication of these claims."
For years before the scandal broke, both accounting firm KPMG and OFHEO cleared Fannie’s bookkeeping, Salky said.
[4]: "U.S. Files Charges in Fannie Mae Accounting Case", by Jeremy W. Peters, New York Times, December 18, 2006.
The charges were the latest development in the fallout over accounting violations at Fannie Mae. After the housing oversight office denounced Fannie Mae in a scathing report in May, the company agreed to pay a $400 million settlement. Earlier this month, Fannie restated its earnings for several years, making a total of $6.3 billion in various corrections, to straighten out inaccuracies in its financial statements. It was one of the largest corporate accounting restatements on record.
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Fannie Mae, the second-largest financial institution in the nation, buys home mortgages and sells bonds backed by them, which investors consider to be implicitly backed by the Treasury, though there is no formal guarantee. Its activities and those of similar smaller agencies dominate the mortgage-backed securities market. Once known as the Federal National Mortgage Association, the company changed its name in 1997 to match its Wall Street nickname, based on its abbreviation.
