OFHEO Head Wants Congress to Act on New Rules for Fannie and Freddie
James Lockhart, director of the Office of Federal Housing Enterprise Oversight (OFHEO), the federal watchdog for Fannie Mae and Freddie Mac, the mortgage giants, said in prepared remarks to the American Enterprise Institute that if Congress does not act now on a bill to create stronger regulations for the companies, “the enterprises and their shareholders will continue to confront uncertainty,” MarketWatch reports. Also last week, Freddie Mac announced the conclusion of the Justice Department’s investigation of the mortgage company’s accounting problems.
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With only a few weeks left before Congress goes home for the November elections, it is unlikely that new rules for the government sponsored mortgage companies will be voted on this year.
Lockhart has previously said legislative reform would take years, MarketWatch says.
Lockhart also said that the OFHEO would be filing litigation against two executives of Fannie Mae but did not name names, the Associated Press reports. When asked by reporters if the two were Fannie Mae’s former chief financial officer (CFO), Timothy Howard, and former chairman and chief executive officer (CEO), Franklin Raines, Lockhart said, “they are the top two.”
Last week, Freddie Mac spokesman Doug Duvall said in a statement that the company will not face criminal charges in connection with its accounting scandal, the AP reported. “It is Freddie Mac’s understanding that it is the practice of the U.S. Attorney’s Office for the Eastern District of Virginia neither to issue official notices nor to confirm publicly the conclusion of an investigation,” Duvall said. “However, the U.S. Attorney’s office has not initiated contact with us in well over two years, and it is our understanding that the matter is inactive. Accordingly we expect no further action in this matter.”
The spokesman for the U.S. Attorney’s office declined to comment.
Last month, however, when Fannie Mae announced that the criminal investigation against it had been concluded, the Justice Department (DoJ) confirmed the company’s statement, the AP report says.
Former executives at Freddie Mac are still under investigation by the Securities and Exchange Commission (SEC) for possible violations of securities law. SEC spokeswoman Stefanie Mullin said the agency was “pursuing enforcement actions against former Freddie Mac executives,” the AP reports. Leland Brendsel, chief executive officer; David Glenn, president; and Vaughn Clarke, chief financial officer were ousted when accounting problems at Freddie Mac were disclosed in 2003.
Martin Baumann, who assumed the position of chief financial officer at Freddie Mac in June 2003, will leave that position to serve as deputy director in the office of research and analysis for the Public Company Accounting Oversight Board (PCAOB), the board announced Wednesday. Before joining Freddie Mac, Baumann had spent 30 years at PricewaterhouseCoopers (PwC).
“My decision to join the PCAOB reflects my view of the importance of the integrity of financial reporting to our capital markets,” Baumann said in a statement, according to the AP. “I was committed to that for over 30 years at PwC, and I joined Freddie Mac to restore accuracy, integrity and reliability to its financial reporting. The PCAOB gives me an opportunity to meld that experience with public service.”