Fannie Fraud
Forgery and Fraud: Yesterday, during congressional testimony Armando Falcon Jr., director of the Office of Federal Housing Enterprise Oversight, said: Fannie Mae employees falsified signatures on accounting transactions that helped the company meet earnings targets for 1998, a manipulation that triggered a $27.1 million bonus pool for senior executives.
Insider Trading and Securities Dumping: Falcon also criticized Fannie's policy of "cherry picking". Holding mortgage-backed securities for a month before deciding whether to sell them or hold them in the company's own investment portfolio. Critics have said that Fannie has an insiders advantage because it obtains non public information regarding the loans through its quasi government status. Fannie has denied using this information to decide which loans or MBS to keep or sell.
Imminent Danger: Fed chairman Greenspan called on Congress to sharply reduce the two companies mortgage portfolios "while we can," saying that without a reduction, they will "inevitably" have major financial problems, causing a crisis in the economy.
Insider Trading and Securities Dumping: Falcon also criticized Fannie's policy of "cherry picking". Holding mortgage-backed securities for a month before deciding whether to sell them or hold them in the company's own investment portfolio. Critics have said that Fannie has an insiders advantage because it obtains non public information regarding the loans through its quasi government status. Fannie has denied using this information to decide which loans or MBS to keep or sell.
Imminent Danger: Fed chairman Greenspan called on Congress to sharply reduce the two companies mortgage portfolios "while we can," saying that without a reduction, they will "inevitably" have major financial problems, causing a crisis in the economy.
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