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2nd home mortgage
Top Fannie Mae Execs Step Down
By Mark Felsenthal WASHINGTON (Reuters) - The chief executive and chief financial officer of U.S.
mortgage finance giant Fannie Mae stepped down late on Tuesday after regulators exposed accounting errors that are expected to force a massive earnings restatement. Fannie Mae's board of directors announced that CEO Franklin Raines was retiring and Chief Financial Officer Timothy Howard was resigning. After months of drama about Fannie Mae's operating methods, the Securities and Exchange Commission last week determined the company would have to correct substantial errors in its financial reports. The magnitude of the restatement, though not yet clear, was expected to be valued in the billions of dollars and prompted the company's regulator to say it was working on a capital restoration plan as part of planned reforms at Fannie Mae. The departures of Raines and Howard mark the latest in a string of accounting controversies that have rocked Wall Street. Raines, a former Clinton administration budget director renowned for his close ties to Capitol Hill lawmakers, said he was fulfilling a promise to hold himself to account if regulators agreed there were significant mistakes in his company's accounting. The 55-year-old Raines grew up in humble circumstances in Seattle, but became a Harvard-trained investment banker and was touted as a possible Treasury secretary if Democratic presidential candidate Sen. John Kerry had won last month's election. "By my early retirement, I have held myself accountable," said Raines, who has led Fannie Mae for almost six years and achieved prominence as a politically astute leader of one of the nation's largest companies, one which has been under intense scrutiny for most of his tenure. TEMPORARY LEADERS NAMED The Fannie Mae board named Daniel Mudd, currently chief operating officer, as interim chief executive. It picked Robert Levin, now an executive vice president, as interim chief financial officer. As part of the shakeup, Fannie Mae board members dismissed independent auditor KPMG and said they were looking for a new auditor. Fannie Mae, a shareholder-owned company, is chartered by Congress to supply funds to U.S.
mortgage markets. The company does not lend directly to
home buyers. While Fannie Mae's debt is not guaranteed by the government, many investors believe there is an implicit guarantee due to the nature of its charter. Continued ...
Source: reuters.com