Freddie Mac Hires Spin Doctor Ahead of Restatement

Boerner declined to discuss the consulting firm's work. He said the firm began working for Freddie sometime after regulators forced the mortgage giant to oust Gregory Parseghian as its chief executive in late August.

In June, Freddie's board of directors turned to Parseghian, a longtime employee, to limit the damage from the accounting scandal, after the mortgage firm was forced to oust its three top executives. But Parseghian soon came under fire when an internal investigation revealed that he had approved many of the same questionable accounting maneuvers that led to the ouster of the three former executives.

Baker & Botts, a law firm hired by Freddie to investigate the accounting irregularities, found that the company's top executives used a series of sophisticated derivative transactions to deliberately massage the company's quarterly earnings and defer the recognition of profit until future years.

The accounting scandal at Freddie has increased calls on Capitol Hill for greater regulation of the mortgage firm and its bigger sister, Fannie Mae. Freddie and Fannie were chartered by the U.S. government to spur home ownership by making secondary markets in mortgages and mortgage bonds, and both have become highly profitable. But critics contend the mortgage giants have taken on too much debt and risk, and they want the businesses to be reined in.

The accounting issues at Freddie are being investigated by both the Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight, a 10-year-old agency that is the primary regulator of the two mortgage firms.

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