Fannie Mae has already disclosed the accounting problems that caused its nearly $11 billion accounting scandal, none of its current management knowingly participated in improper behavior, and necessary improvements have been made or are underway, a long-awaited report on the mortgage giant revealed today.

The 2,652-page report from former New Hampshire Republican Sen. Warren Rudman concluded that Timothy Howard, Fannie’s former chief financial officer, and Leanne Spencer, the company’s former controller, were responsible for the accounting practices that departed from generally accepted accounting principles (GAAP).

As for the mortgage giant’s former chief executive officer, Franklin Raines, the report said, “We did not find that he knew that the company’s accounting practices departed from GAAP in significant ways.”

The report said it did find that Raines contributed to a culture that improperly stressed stable earnings growth, and that hence he was “ultimately responsible for the failures that occurred on his watch.”

The report said the accounting practices in virtually all areas under review were not consistent with GAAP. Management in many instances was aware of that, and those improper procedures were motivated by a desire to attain earnings stability, the report said.

The report was consistent with remarks Rudman had made in the first week of January to the effect that he had discovered no new accounting problems as he conducted the investigation for the report.

Entities including Wall Street and Congress had awaited today’s report in search of any sign that Fannie’s troubles were more extensive than already disclosed.

In the wake of the report, Fannie Mae’s shares were trading at $57.61 late this morning on the New York Stock Exchange, up 3 percent from Wednesday’s close.

“I’m sure there will be lots of criticism of what was done but the key thing for me is can current management under Daniel Mudd distinguish themselves from this, and it sounds like they come out and say that explicitly,” Nancy Vanden Houten, analyst at Stone & McCarthy Research Associates in Princeton, N.J., told Reuters.

The lack of material revelations in the report may keep Senate Republicans from pushing through a White House-backed bill to boost oversight of Fannie and its sibling government-sponsored enterprise Freddie Mac that would force cuts in the companies’ investment portfolios, according to Reuters.

“At the end of the day, we do not see Rudman acting as the catalyst that pushes Congress into the portfolio limitations favored by the administration and Senator (Richard) Shelby — especially in light of the absence of new material accounting revelations,” Howard Glaser, mortgage industry consultant and former senior housing official under the Clinton administration, told Reuters.

The 2,652-page report, complete with appendices, presents a comprehensive review of the mortgage giant’s massive accounting problems, expected to lead to a profit restatement of $11 billion.

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Send tips or a Letter to the Editor to janis@inman.com or call (510) 658-9252, ext. 140.

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