Fannie Mae
Fannie Mae (Federal National Mortgage Association or FNMA) is regarded as the the nation’s second largest financial institution in the United States. [1] The company also is believed to finance one of every five home-mortgage loans in the United States. [2]
According to its website, Fannie Mae provides "financial products and services that make it possible for low-, moderate-, and middle-income families to buy homes of their own." [3]
However, on April 15, 2006, in an article by the Associated Press, Fannie Mae fell short in 2005 of some of the government-set goals for making home ownership affordable partly due to an $11 billion scandal. [4]
The article also stated that the company gave its chief executive officer, Daniel Mudd, $8 million of restricted company stock and a $2.6 million cash bonus for 2005 in addition to his $950,000 salary. [5]
Contents
Charges of inappropriate accounting practices
Back in 2004, the company was involved in a multi-billion financial accounting scandal. On September 22,2004, Fannie Mae was charged with "with inappropriate accounting practices" by a government review. The Office of Federal Housing Enterprise Oversight, the company's official regulator outlined their findings by stating that Fannie Mae's accounting methods "deviate from standard practice, internal control failures and presents a pattern that accentuated stable earnings at the expense of accurate financial disclosures." [6]
As a result of the scandal, its chief executive Franklin Raines and J. Timothy Howard, the company’s chief financial officer, stepped down in December 2004. [7].
A review by the Securities and Exchange Commission in December 2004, concluded that the company has to restate earnings back to 2001 because it violated accounting rules for derivatives, which are financial instruments used to hedge against interest-rate swings, as well as for prepaid loans. [8]
In February 2006, a report by a team of investigators led by former U.S. Senator of New Hamsphire Warren Rudman pointed to J. Timothy Howard as mainly being responsible for the accounting failures. The report also stated that that former chairman and CEO Franklin Raines, while not sharing direct responsibility, "contributed to a culture of arrogance at the government-sponsored company." Rudman was hired by the board of Fannie Mae, as independent counsel to launch an investigation at the time of the stunning disclosures in September 2004. [9]
On April 26, 2006, the Bush administration appointed James Lockhart, deputy commissioner of the Social Security Administration, to head the the Office of Federal Housing Enterprise Oversight that regulates Fannie Mae and Freddie Mac. [10]
Lobbying
From 1998 to 2008, Fannie Mae spent $80.53 million on federally registered lobbyists, including $2 million in 2005 to hire the Republican firm DCI to defeat legislation that would have imposed tougher regulations on aFreddie’s loan repurchase activities.[1]
Personnel
- Daniel H. Mudd - President and Chief Executive Officer
- Michael J. Williams - Executive Vice President and Chief Operating Officer
- Robert Levin - Executive Vice President and Chief Business Officer
- David O. Maxwell - retired as Chairman of the Board and Chief Executive Officer in 1991
- Frederick B. Harvey III
Contact details
3900 Wisconsin Ave. NW
Washington, DC 20016
Phone: 202-752-7000
Email: headquarters AT fanniemae.com
Web: http://www.fanniemae.com
Articles & resources
References
- ↑ Page 84-85, Sold Out - How Wall Street and Washington Betrayed America , Consumer Education Foundation, March, 2009.
- ↑ Fannie Mae Executives, accessed July 2007.
External resources
- Sold Out - How Wall Street and Washington Betrayed America , Consumer Education Foundation, March, 2009.
External links
- David S. Hilzenrath, Report Slams Fannie Mae, Washington Post, September 23, 2004.
- Fannie Mae Finds More Errors in Review, Associated Press, March 13, 2006
- Tom Van Riper Fannie Mae Finally Recovering From Scandals, Forbes, April 6, 2006
- Fannie Mae CEO's Bonus Target at $2.61M, Associated Press, April 28, 2006.
- Kathleen Day, Lockhart Is Tapped for Housing Oversight Job, Washington Post, April 28, 2006.
- David D. Kirkpatrick and Charles Duhigg, "Loan Titans Paid McCain Adviser Nearly $2 Million," New York Times, September 21, 2008.
