Fannie Mae Expected to Pay Millions

Reports say the mortgage giant will get hit with hefty fines for the alleged manipulation of its books.
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Mortgage heavyweight

Fannie Mae

on Tuesday is expected to pay a fine of several hundred million dollars for the alleged manipulation of accounting rules to benefit the bonuses of its executives.

According to report late Monday by

The Wall Street Journal

, the settlement of the nearly three-year investigation by regulators from the Office of Federal Housing Enterprise Oversight (OFHEO) and the

Securities and Exchange Commission

will be accompanied by a long-awaited critical report expected to confer blame on Fannie's board and top executives for "fostering a culture that allowed managers to disregard accounting rules and manipulate earnings."

Another published report says that regulators are expected to recommend that the company review the executives' actions with an eye to possibly firing or disciplining them, two individuals familiar with the coming report said.

According to people familiar with the report, says the

Journal

, "OFHEO found that Fannie was infected by a belief that 'we're smarter than anyone else,' said a source who reviewed the document."

Fannie Mae also did not invest in computer systems and expertise to ensure that it would be in compliance with accounting rules and up-to-date, accurate bookkeeping, the person said.

The news comes as the beleaguered

government-sponsored company struggles to emerge from an $11 billion accounting scandal and effects of its failure to file timely financial reports.

The OFHEO, Fannie Mae and the SEC all declined comment, the reports say.