Fannie Mae Expected To Pay Large Fine

House home improvement money financing mortgage interest rates
CBS/AP
Embattled mortgage giant Fannie Mae is expected to be fined several hundred million dollars over the alleged manipulation of accounting so that executives could collect millions in bonuses, in a settlement to be announced Tuesday.

The deal with the Office of Federal Housing Enterprise Oversight and the Securities and Exchange Commission comes as the government-sponsored company struggles to emerge from an $11 billion accounting scandal. The housing oversight agency is scheduled on Tuesday to issue the results of its extensive investigation of Fannie Mae, an assessment that is widely expected to be sharply critical and to touch on areas not addressed in a previous report ordered by the company's board of directors.

Those areas include the role of Fannie Mae's board and some executives still at the company in the accounting debacle, according to two individuals familiar with the report, who spoke Monday on condition of anonymity because it had not yet been made public. The regulators are expected to recommend that the company review the executives' actions with an eye to possibly firing or disciplining them, they said.

One of the individuals confirmed the anticipated fine against Washington-based Fannie Mae, which was first reported Monday evening by The Wall Street Journal Online.

According to regulators, Fannie Mae in 1998 improperly put off accounting for $200 million in expenses to future periods so executives could collect $27 million in bonuses.

Documents cited in a report released earlier this year show that top-level management was focused on the $200 million deferral and meeting earnings targets that would trigger the payment of full bonuses.

OFHEO spokeswoman Stefanie Mullin and SEC spokesman John Nester declined comment Monday.