This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Fannie Restatement Ordered

The staff of the Securities and Exchange Commission has ordered Fannie Mae (FNM) to restate its financials over the last four years.

The decision comes as a huge blow to the nation's biggest mortgage company, whose bookkeeping has come under increasing fire in recent months. The company and its top officers, including CEO Franklin Raines, have repeatedly defended Fannie's accounting practices.

SEC Chief Accountant Donald Nicolaisen, in a statement released late Wednesday, said the government-sponsored company's accounting for 2001 through mid-2004 "did not comply in material respects" with accounting rules for derivatives, financial instruments used to hedge against interest rate swings, and for some transactions related to loans, The Associated Press reported.

Fannie said this fall that a restatement could force it to report after-tax losses on its derivatives transactions of as much as $9 billion. The losses could cause the company to become severely undercapitalized, an event that potentially could force it to sell stock or assets to raise money.

The SEC findings come on top of a scathing report filed this fall by Fannie's regulator, the Office of Federal Housing Enterprise Oversight. OFHEO contended Fannie Mae deliberately violated accounting rules in an effort to smooth out quarterly earnings, meet financial projections and boost bonuses for its top executives.

A Fannie spokesman indicated the company would comply with the SEC ruling, according to news reports.

Fannie shares rose 30 cents Wednesday to $70.69.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%
TSLA $218.42 0.00%
YHOO $44.52 0.00%


DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs