Pete Theisen wrote: > Leland F. Jackson, CPA wrote: > >> It seems to me that the accounting firm that audited the financial >> statements of Fannie Mae and Freddie Mac could be in a heap of trouble. >> > > Hi Leland! > > Other documents suggest that audits were never done, at the insistence > of the people who we are looking at now. Here's a couple related links: > > http://housingdoom.com/category/bubble-horror-stories/ > http://housingdoom.com/2006/12/18/fannie-charges/ >
Previous to the government buyout, Fannie Mae and Freddie Mac were usually referred to as GSEs -- Government Sponsored Enterprises, where one of the major shareholders was the US Government. Still, these companies were publicly traded over the NYSE, which it seem would make them subject to SEC regulations that requires publicly traded companies to submit audited financial statement annually. These companies must have provided the SEC with audited financial statements, but the accusations seem to be that management manipulated the financial statement by overstating earnings to increase bonuses for themselves by not following generally accepted accounting practices for mortgage companies. They were able to manipulate the books, because of a lack of internal controls, or the internal controls in place were circumvented. The first step in an audit of financial statements by a CPA firm is to conduct a study and evaluation of the system of internal controls to determine if they can be relied upon in the performance of the audit. Regards, LelandJ > The important question is that these same men are now working in the > Obama campaign. Did he not check their background or is their background > what makes them interesting to him? > They probably came highly recommended by the Bush Administration, (eg Franklin Raines, Tim Howard and Jim Johnson did a heck of a job for me.) LOL Regards, LelandJ > >>> Here is a quick look into 3 former Fannie Mae executives who have >>> brought down Wall Street. >>> >>> Franklin Raines was a Chairman and Chief Executive Officer at Fannie >>> Mae. Raines was forced to retire from his position with Fannie Mae >>> when auditing discovered severe irregulaties in Fannie Mae's accounting >>> activities. At the time of his departure The Wall Street Journal noted, >>> " Raines, who long defended the company's accounting despite mounting >>> evidence that it wasn't proper, issued a statement late Tuesday >>> conceding that "mistakes were made" and saying he would assume >>> responsibility as he had earlier promised. News reports indicate the >>> company was under growing pressure from regulators to shake up its >>> management in the wake of findings that the company's books ran afoul of >>> generally accepted accounting principles for four years." Fannie Mae >>> had to reduce its surplus by $9 billion. >>> >>> Raines left with a "golden parachute valued at $240 Million in benefits. >>> The Government filed suit against Raines when the depth of the >>> accounting scandal became clear. >>> http://housingdoom.com/2006/12/18/fannie-charges/ . The Government >>> noted, "The 101 charges reveal how the individuals improperly >>> manipulated earnings to maximize their bonuses, while knowingly >>> neglecting accounting systems and internal controls, misapplying over >>> twenty accounting principles and misleading the regulator and the >>> public. The Notice explains how they submitted six years of misleading >>> and inaccurate accounting statements and inaccurate capital reports that >>> enabled them to grow Fannie Mae in an unsafe and unsound manner." These >>> charges were made in 2006. The Court ordered Raines to return $50 >>> Million Dollars he received in bonuses based on the miss-stated Fannie >>> Mae profits. >>> >>> Tim Howard - Was the Chief Financial Officer of Fannie Mae. Howard "was >>> a strong internal proponent of using accounting strategies that would >>> ensure a "stable pattern of earnings" at Fannie. In everyday English - >>> he was cooking the books. The Government Investigation determined that, >>> "Chief Financial Officer, Tim Howard, failed to provide adequate >>> oversight to key control and reporting functions within Fannie Mae," >>> >>> On June 16, 2006, Rep. Richard Baker, R-La., asked the Justice >>> Department to investigate his allegations that two former Fannie Mae >>> executives lied to Congress in October 2004 when they denied >>> manipulating the mortgage-finance giant's income statement to achieve >>> management pay bonuses. Investigations by federal regulators and the >>> company's board of directors since concluded that management did >>> manipulate 1998 earnings to trigger bonuses. Raines and Howard resigned >>> under pressure in late 2004. >>> >>> Howard's Golden Parachute was estimated at $20 Million! >>> >>> Jim Johnson - A former executive at Lehman Brothers and who was later >>> forced from his position as Fannie Mae CEO. A look at the Office of >>> Federal Housing Enterprise Oversight's May 2006 report on mismanagement >>> and corruption inside Fannie Mae, and you'll see some interesting things >>> about Johnson. Investigators found that Fannie Mae had hidden a >>> substantial amount of Johnson's 1998 compensation from the public, >>> reporting that it was between $6 million and $7 million when it fact it >>> was $21 million." Johnson is currently under investigation for taking >>> illegal loans from Countrywide while serving as CEO of Fannie Mae. >>> >>> Johnson's Golden Parachute was estimated at $28 Million. >>> >>> WHERE ARE THEY NOW? >>> >>> FRANKLIN RAINES? Raines works for the Obama Campaign as Chief Economic >>> Advisor >>> >>> TIM HOWARD? Howard is also a Chief Economic Advisor to Obama >>> >>> JIM JOHNSON? Johnson hired as a Senior Obama Finance Advisor and was >>> selected to run Obama's Vice Presidential Search Committee >>> >>> IF OBAMA PLANS ON CLEANING UP THE MESS - HIS ADVISORS HAVE THE EXPERTISE >>> - THEY MADE THE MESS IN THE FIRST PLACE. >>> >>> Would you trust the men who tore Wall Street down to build the New Wall >>> Street ? >>> --- StripMime Report -- processed MIME parts --- multipart/alternative text/plain (text body -- kept) text/html --- _______________________________________________ Post Messages to: [email protected] Subscription Maintenance: http://leafe.com/mailman/listinfo/profox OT-free version of this list: http://leafe.com/mailman/listinfo/profoxtech Searchable Archive: http://leafe.com/archives/search/profox This message: http://leafe.com/archives/byMID/profox/[EMAIL PROTECTED] ** All postings, unless explicitly stated otherwise, are the opinions of the author, and do not constitute legal or medical advice. 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