Mortgage Giant Overstated the Size of Its Capital Base

New York Times by Gretchen Morgenson, Charles Duhigg | Sep. 7, 2008 (News Report)

The government's planned takeover of Fannie Mae and Freddie Mac, expected to be announced on Sunday, came together after advisers poring over the companies' books for the Treasury Department concluded that Freddie's accounting methods had overstated its capital cushion, according to regulatory officials briefed on the matter.

The proposal to place both companies, which own or back $5.3 trillion in mortgages, into a government-run conservatorship ... Full Story »

Posted by Leo Romero

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Tanya J. Maurer
4.6
 by Tanya J. Maurer - Oct. 1, 2008

The most interesting and understated paragraph says Freddy Mac had made accounting decisions that pushed losses into the future and postponed a capital shortfall until the fourth quarter of this year, which would not need to be disclosed until early 2009. That suggests to me that rich white republican managers of Freddie may have been politically motivated to postpone the disaster news until after the election. I would like to see more on that question.

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Tanya's Rating

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