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Senate Holds Hearing on Fannie Mae Accounting Abuses, GSE Reform On June 15, 2006, the Senate Banking Committee held a hearing on the recently released Office of Federal Housing Enterprises Oversight (OFHEO) special examination of Fannie Mae's accounting abuses. Fannie Mae was fined $400 million and agreed to execute 50 corrective actions intended to address accounting abuses, internal controls and risk management issues. Regulators maintained that while Fannie Mae is making progress on remaking itself, it had a long way to go. Director Lockhart suggested it would take three years for Fannie Mae and Freddie Mac to complete the prescribed corrective actions. The Senators praised OFHEO Acting Director John Lockhart and SEC Chairman Christopher Cox for their agencies' regulatory oversight. But Fannie Mae CEO Dan Mudd and Board Chairman Stephen Ashley were grilled by Republicans, especially Senators Richard Shelby (R-AL), Chuck Hagel (R-NE) and John Sununu (R-NH). Sen. Hagel asserted that the Fannie Mae board failed in its role and allowed Fannie Mae's accounting fraud to proceed unchecked. Sen. Hagel even suggested that Mudd should resign as CEO since he was Fannie Mae's Chief Operations Officer during the time the accounting abuses occurred. Democrats took the Fannie Mae officials to task for the accounting and governance failures, but asserted that Congress should not overreact or hamstring the GSEs' housing mission. By hearing end, it was clear that the partisan deadlock on Senate GSE reform legislation remained. CONTACTS: Lynn King 202-383-1156, Lynn King 202-383-1156, Jeff Lischer 202-383-1117  GSEs Latest News
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