07-18-2018  6:02 am      •     
The Skanner Report
By The Skanner News
Published: 24 May 2006

WASHINGTON—Senior executives at Fannie Mae manipulated accounting to collect millions of dollars in undeserved bonuses and to deceive investors, a federal report charged Tuesday. The government-sponsored mortgage company was fined $400 million.

The blistering report by the Office of Federal Housing Enterprise Oversight, the result of an extensive three-year investigation, was issued as Fannie Mae struggled to emerge from an $11 billion accounting scandal. Also Tuesday, the housing oversight agency and the Securities and Exchange Commission announced a $400 million civil penalty against Fannie Mae in a settlement over the alleged accounting manipulation.

Of that amount, the $350 million assessed by the Security Exchange Commission — one of the largest penalties ever in an accounting fraud case — will go to compensate Fannie Mae investors damaged by the alleged violations.

The company also agreed to limit the growth of its multibillion-dollar mortgage holdings, capping them at $727 billion, and to make top-to bottom changes in its corporate culture, accounting procedures and ways of managing risk. Thirty executives and employees at the company as well as others who have left — including Daniel Mudd, the current president and CEO — will be reviewed for possible disciplinary action or termination.

Washington-based Fannie Mae neither admitted nor denied wrongdoing under the settlement but did agree to refrain from future violations of securities laws.
— The Associated Press

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