Washington – Senior executives at Fannie Mae manipulated accounting to collect millions of dollars in undeserved bonuses and to deceive investors, a federal report charged Tuesday. The government-sponsored mortgage company was fined $400 million.
The blistering report by the Office of Federal Housing Enterprise Oversight, the result of an extensive three-year investigation, was issued as Fannie Mae struggled to emerge from an $11 billion accounting scandal. The housing-oversight agency and the Securities and Exchange Commission announced a $400 million civil penalty against Fannie Mae in a settlement over the alleged accounting manipulation.
Of that amount, the $350 million assessed by the SEC – one of the largest penalties ever in an accounting-fraud case – will go to compensate Fannie Mae investors damaged by the alleged violations.
The company also agreed to limit the growth of its multibillion-dollar mortgage holdings, capping them at $727 billion, and to make top-to-bottom changes in its corporate culture, accounting procedures and ways of managing risk. Thirty executives and employees at the company – including Daniel Mudd, president and chief executive – as well as others who have left will be reviewed for possible disciplinary action or termination.
Washington-based Fannie Mae neither admitted nor denied wrongdoing under the settlement but did agree to refrain from future violations of securities laws.
