The government will pursue some Fannie Mae executives to recover bonus money they reaped in an accounting scheme, if the mortgage giant itself fails to do so, an official said Thursday, according to media accounts.
At his confirmation hearing Thursday to become permanent director of the Office of Federal Housing Enterprise Oversight, James B. Lockhart also told senators he would maintain his independence as the chief regulator of embattled Fannie Mae and its smaller government-sponsored sibling, Freddie Mac, accounts said.
Lockhart is now acting director of OFHEO. He appeared before the Senate Banking Committee with three other nominees for positions with independent regulatory agencies.
The OFHEO, which Lockhart would head if confirmed, last month issued a scathing report alleging a six-year accounting fraud at Fannie Mae. It said employees manipulated accounting to hit company quarterly earnings targets so senior executives could pocket hundreds of millions in bonuses from 1998 to 2004.
“The first line of defense is that the board of Fannie Mae should go after these individuals and try to get restitution” of some of the bonus money, Lockhart testified Thursday, according to accounts. The directors owe the shareholders no less, he said, and if they fail to do so his agency will pursue the executives, media accounts said.