Facts on Fannie's fraud ... / $10.6 BILLION overstated earnings/ USA Today

[TexasLawyer]

Facts on Fannie's fraud ...
Posted 5/30/2006 8:41 PM

<snip>
... the facts don't look very good for Raines and Fannie Mae.

In releasing a 348-page report last week, government officials said the company engaged in "extensive financial fraud" by doctoring earnings so Raines and other executives could earn "unjustified levels of compensation." Officials also said the company suffered from "an arrogant and unethical corporate culture."

These are extraordinarily damning assertions. They show a company whose top executives were contemptuous of criticism and imbued with a sense of entitlement to enrich. According to the report, Raines pulled in more than $90 million in his six years as CEO, $52 million of which was performance pay triggered by bogus accounting.

Fannie Mae is no average company. A federally chartered institution created during the Depression to provide more money for mortgages, it was spun off in the 1960s by Congress into a lucrative private company that still enjoys taxpayer-financed perks. It does not have to pay state and local taxes. It has a standing letter of credit from the U.S. Treasury. It is exempt from many of the reporting requirements of other public corporations. It can borrow money at lower interest rates than other companies can.

It also creates special risks. The company, which pours money into the housing market by buying millions of mortgages from banks, is crucial to the functioning of the economy. For that reason, taxpayers would almost certainly be called on to bail it out if it ever got into serious financial trouble. That makes an honest accounting of its profits, assets and liabilities a vital public trust.

<snip>

The company overstated its earnings by $10.6 billion over six years, according to last week's report.

<snip>

http://www.usatoday.com/news/opinion/2006-05-30-fannie-mae-fraud_x.htm

[Faux pas]

1. Sheesh, I have to believe this type of practice is rampant and

everywhere. Thanks for the thread.

[truthisfreedom]

2. so is someone going to jail? or should i say, a bunch of people?

[ThomWV]

3. Surely You Jest

Not a chance.

[BR_Parkway]

5. Only the Democrats in the office, Repugs have special rights

[JackRiddler]

4. Time to invoke national security!

Intelligence Czar Can Waive SEC Rules
Now, the White House's top spymaster can cite national security to exempt businesses from reporting requirements


President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.

http://www.businessweek.com/bwdaily/dnflash/may2006/nf20060523_2210.htm?campaign_id=search

[TexasLawyer]

6. Whoa-- That is BIG

I thought that this comment on the new provision was very perceptive--

All comments:
Intelligence Czar Can Waive SEC Rules


Date reviewed: May 25, 2006 6:27 PM
Nickname: M.S.Acctg.

Review: A "rational" stock market should drop like a stone. This is a licence to kill-- the economy. In effect, this furthers a corrupt Communist crony system of "official", "protected" corporations. One set of cooperating corps. can waive all accounting rules. This undermines the market and should send international investors that aren't cronies packing.

http://www.businessweek.com/bwdaily/dnflash/may2006/nf20060523_2210.htm
Date reviewed: May 25, 2006 5:44 PM

http://app.businessweek.com/UserComments/get_reviews?action=all&productId=6457&pageIndex=2

[JackRiddler]

7. No shit

But that's the idea. The rational stock market was killed some time ago. This is an acknowledgement. Everyone's too busy playing "pull your chips out just before it melts."

[JackRiddler]

8. this deserves more of a kick than most people seem to realize

...