The Fannie Scandal: The 'Financiopaths' Did It
Jami L. Harris
University of Phoenix
ACC 363/ Financial Accounting 2
Facilitator: Eduard Delacruz
Nov 5, 2006
When most people hear the word " Enron, " they the first thought that all comes to mind is watching the news with the executives being taken by handcuffs into a police car due to the scandal. Though that remains incredibly familiar in the minds of the American people, Fannie Mae had also lead a scandalous act to line the pockets with millions of dollars to get the top executives. This newspaper is going to help the reader to understand the flaws of the accounting practices in the mortgage sector and why research in a company before action is usually taken is vital.
On September 22, 2004, Fannie Mae was charged with " with inappropriate accounting practices" by a federal government review. Work of Federal government Housing Venture Oversight, the company's official regulator outlined their findings by simply stating that Fannie Mae's accounting strategies " deviate from common practice, interior control failures and reveals a style that accentuated stable earnings at the price of exact financial disclosures. " (Paul Muolo, 2006). The conclusions concluded that the corporation has to restate earnings to 2001 as it violated accounting rules intended for derivatives, which can be financial tools used to hedge against interest-rate swings, as well as for prepaid loans. " Buyers have been tricked, homebuyers have already been cheated, and taxpayers are in risk, " said Repetition. Richard L. Baker (R-La. ), chief of the House subcommittee on capital markets. (David S. Hilzenrath, 2004)
Fannie Mae, the giant mortgage loan provider, has used poor accounting strategies that increase serious inquiries about the quality of its managing and the quality of their financial reports resulting in an $11 billion dollars accounting scandal. Regulators experienced earlier declared that Fannie Mae in 1998...
Referrals: Hilzenrath, David S. Wa Post. Statement Slams Fannie Mae. September 23, 2005; Page A01. Retrieved The fall of 4, 2006.
Muolo, Paul. Mortgage loan Servicing Reports. The Fannie Scandal: The Financiopaths ' Did It. Nyc: Aug 1, 2006. Vol. 10, Iss. 7; pg. 5. Gathered November 5, 2006.