Industry News

Feds charge former Fannie Mae execs with manipulating earnings

More than $215 million in civil penalties, restitution sought

Government regulators said Monday they will seek more than $100 million in civil penalties from three former Fannie Mae executives accused of submitting six years of inaccurate accounting reports, and the return of more than $115 million in bonuses. The Office of Federal Housing Enterprise Oversight filed 101 charges against former Fannie Mae Chairman and Chief Executive Officer Franklin Raines, former Chief Financial Officer J. Timothy Howard, and former controller Leanne G. Spencer. The charges, which will be heard by an administrative law judge, stem from OFHEO's investigation of management and accounting practices from 1998 to 2004. OFHEO Director James Lockhart said other current and former Fannie Mae executives could face similar charges. The charges reveal how Raines, Howard and Spencer "improperly manipulated earnings to maximize their bonuses, while knowingly neglecting accounting systems and internal controls, misapplying over 20 accounting principles and misleading the...