Wednesday May 24, 2006

Fannie Mae to pay US$400m fine in accounting scandal

channelnewsasia.com :

US mortgage finance giant Fannie Mae agreed to pay a US$400 million fine for massive accounting violations, officials said, after an audit reported "an arrogant and unethical corporate culture."

The settlement was announced jointly by the Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight after a OFHEO report detailed improper accounting and earnings manipulation designed to trigger bonuses for senior executives from 1998 to 2004. The audit found the government-chartered mortgage firm had poor internal controls, and as a result overstated reported income and capital by an estimated US$10.6 billion from 1998 to 2004. The report adds weight to calls for reform of the mortgage giant, the world's second largest borrower after the US government.

A government-chartered corporation, Congress created Fannie Mae to add more liquidity to the housing market and to help low- and middle-income families buy homes. Fannie Mae, along with other government-chartered mortgage entities, guarantees or owns trillions of dollars of loans. Although its bonds are not guaranteed by the US government, Fannie Mae is often seen as a safer investment than other private securities, although critics say the massive loan portfolio may have more risks than widely believed.

- So, is this the Enron of the housing market? Can a full-scale housing collapse be not too far behind?

(2006-05-24 18:12:49 SGT) [Biz] Permalink

Most popular blog postings on lowem.log :

1. Singapore MRT rail network length to double by 2020
2. 2010 Nissan Leaf electric car specifications : 107hp, 24KWh lithium-ion batteries, 100-mile range
3. Live spot gold price quotes chart on COMEX
4. 2010 Toyota Prius specifications released : 50 mpg, 1.8L, 134hp, Ni-MH, solar roof option
5. AVG Anti-Virus Free Edition 2011 direct download link
6. Real-time live gold and silver price quotes chart on COMEX
7. Singapore electric vehicles : Government agencies EMA and LTA to study EV introduction
8. Book review : Shut Down by William Flynn

Featured articles on lowem.log :

1. Book review : Shut Down by William Flynn
2. Singapore electric cars testing starts with 9 electric vehicles
3. Honda, GS Yuasa JV to make lithium-ion batteries for 2010/2011 Honda Civic Hybrid
4. 2010 Honda Civic Hybrid preliminary specifications released
5. 2010 Honda CR-Z hybrid, 2010 Honda Fit/Jazz hybrid models confirmed
6. 2010 Toyota Prius specifications released : 50 mpg, 1.8L, 134hp, Ni-MH, solar roof option
7. NYMEX crude oil recovers from $32.40 low after 2.2 mbpd OPEC production cut announced
8. Singapore : Nuclear power not ruled out