The United States Federal Government created the Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, in 1938 to establish a secondary market for mortgages insured by the Federal Housing Administration (FHA). Fannie Mae buys mortgages on the secondary market, pools them and sells them as mortgage-backed securities to investors on the open market. This secondary mortgage market helps to replenish the supply of lendable money for mortgages and ensures that money continues to be available for new home purchases. Fannie Mae is a consistently profitable American corporation. While it receives no direct government funding or backing it has certain looser restrictions placed on its activities than normal financial institutions. For example, it is allowed to sell mortgage backed securities with half the capital backing them up than is required by other financial institutions. In 2004, Fannie Mae came under fire for its accounting practices, prompting an investigation into the Fannie Mae Accounting Scandal. The Office of Federal Housing Enterprise Oversight released a report on September 17 alleging widespread accounting errors; including shifting of losses so senior executives could earn bonuses from making earnings targets. The difficulty centered on how to account for various interest rate hedges Fannie Mae buys as part of its risk management strategy. When Fannie Mae did not release its third quarter results for 2004, doubts increased. Supporters of the company, including senior management, said the problem was merely a disagreement over FASB accounting standards, but in December, the Securities and Exchange Commission ruled that Fannie Mae would have to restate the past 3 1/2 years of earnings, potentially losing $9 billion of earnings over that timeframe, and possibly necessitating increased capitalization. This has not yet impacted the stock price for Fannie Mae, but Moody's and Standard and Poor's have downgraded some of Fannie Mae's subordinate debt. Given the large percentage of the American economy that is tied up in housing values, a major scandal involving Fannie Mae was highly damaging to
Dynamics of Ethics BSHS/322- Professional, Ethical, and Legal Issues and Human Services John Delahoyde October 31, 2011 University of Phoenix-Online Facilitator: Audra Stinson Dynamics of Ethics This following paper will include specific information about the important dynamics of ethics and the origin which they came about. The details within this passage will provide an ethical issue on a midstream change of expectations…
lost retirement accounts. | Did not report large amounts of debt on the balance sheet. | WorldCom - 2002 | Falsely reported assets by over 11B. | Underreported expenses by capitalizing rather than direct expensing; fake accounting entries. | Freddie Mac - 2003 | Misreported over 5B in earnings. | Intentionally misstated and overstated earnings. | AIG - 2005 | Stock price manipulation; over 3.9B in accounting fraud. | Loans were recorded as revenue; colluded with traders to inflate stock prices;…
BUSINESS SOCIETY and ETHICS (BBMM501) Case Study Report DUE WEEK 5.1 Learning Outcome Assessed: a - e Weighting: 30% Written Report Case Study Analysis (2000 words) Assessment -2 Ethics, morality and leadership: The AWB scandal The series of corporate scandals and transgressions that have emerged over the last decade, including those associated with Fannie Mae, Freddie Mac, Alcoa, Enron, HIH, Merck, Lehman Brothers, Parmalat, Union Carbide and WorldCom, have not only contributed to global financial…
Reflective Practice in the context of teaching ESOL Reflective practice engages practitioners in a continuous cycle of self-observation and self-evaluation in order to understand their own actions and the reactions they prompt in themselves and in learners (Brookfield, 1995; Thiel, 1999). Reflective practice is considered as an evolving concept which views learning as “an active process of reviewing an experience of practice in order to describe, analyse, evaluate and so inform learning about…
Alejandro Lopez FIN515 Managerial Finance Dr. Wayne Morgan Week 1 Homework Assignment 15 of May 2013 Mini Case (page 45) Assume that you recently graduated and have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is Michelle DellaTorre, a professional tennis player who has just come to the United States from Chile. DellaTorre is a highly ranked tennis player who would like to start a company to produce and market apparel…
Moody’s Credit Ratings and the Subprime Mortgage Meltdown Table of Contents Introduction……………………………………………….3 Background………………………………………………..4-10 Analysis……………………………………………………10-12 Conclusion…………………………………………………12-13 References………………………………………………….14 In the early-2000s, Moody’s, one of the leading credit rating agencies in the world, evaluated thousands of bonds backed by so-called “subprime” residential mortgages—home loans made to those with both low incomes and poor credit scores…
AGMs window dressing of balance sheets, the loopholes (the case of Satyam) (5) 5 Stock exchange, Sensex and its ups and downs, need for stricter monitoring, how to (5) cover Stock Exchanges, qualities of a good stock exchange reporter 6 Ethics for…