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Friday May 20, 09:16

Fannie Mae bolstered capital

(by Olivia Cohen)

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Government-backed Fannie Mae bolstered its capital, according to its regulator, the Office of Federal Housing Enterprise Oversight, and was "significantly undercapitalized" at the end of 2004.

The Ofheo is forcing Fannie Mae, the nation’s biggest government-sponsored mortgage lender, to restate recent earnings and change accounting practices.

Fannie Mae and its smaller sibling Freddie Mac were accused of accounting violations by the regulators. Federal Reserve Chairman Alan Greenspan called Congress to impose tight limits on Fannie’s mortgages and related securities.

Fannie Mae was "adequately capitalized" as of March 31 and "significantly undercapitalized" at the end of 2004, according to the Office of Federal Housing Enterprise Oversight.

In December, the Securities and Exchange Commission found out that Fannie had violated accounting rules on the valuation of derivative contracts used to hedge interest-rate risks. That resulted into Fannie’s restatement of earnings for the past several years.

Fannie Mae is predicted to suffer losses of about $10.8 billion on derivative contracts.

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Read the related news and articles:
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19 Apr 2005 05:29 PM	Fannie and Freddie fans oppose portfolio limits
14 Apr 2005 05:11 PM	Restrictions on Fannie, Freddie portfolios get support in House
08 Apr 2005 08:40 AM	Fannie and Freddie to be put under strict regulatory limits

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