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The cost of sloppy accounting

John Dimsdale Jun 16, 2006
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The cost of sloppy accounting

John Dimsdale Jun 16, 2006
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TEXT OF STORY

TESS VIGELAND: Senators are renewing their push to beef up the government’s oversight over mortgage finance giant Fannie Mae. The company is working on a massive restatement of earnings going back to 2001. Marketplace’s John Dimsdale has the latest.

JOHN DIMSDALE: Fannie’s current CEO, Daniel Mudd, was chief operating officer when executives were raking in tens of millions of dollars in bonuses from falsely stated earnings. Mudd himself earned 26-million dollars in salaries and bonuses between 2000 and 2003.

The current board chairman Stephen Ashley, has been a director for more than 10 years. So Senate Banking committee members, like Iowa Republican Chuck Hagel seem skeptical of Mudd and Ashley’s claims that they didn’t know the books were being cooked.

REP. CHUCK HAGEL: I do find it astounding that neither of you knew anything was going on.

DANIEL MUDD: Senator I was never aware of any misdeed, any mischaracterization, any intentional violation of accounting rules.

House-passed legislation to rein in Fannie’s independence and limit its mortgage portfolio has stalled in the Senate, but members of the Banking committee say after yesterday’s report, they’re determined to pass the bill this year.

In Washington, I’m John Dimsdale for Marketplace.

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