The analysis concludes that these deceptivepractices--predominantly held together by former chairman and CEOLeland C. Brendsel, who chose to resign amid the controversy, andousted former president and COO David Glenn--along with aninjurious absence of technical skill at the top tiers of corporateaccounting, led to a misstatement of earning ranging from $1.5billion to $4.5 billion for the years 2000 through 2002. "It waswell understood throughout the organization that the tone of'steady Freddie' came from its chief executive officer: Employeesin Funding & Investments, Corporate Accounting and otherbusiness units were expected to take actions that would helpachieve the goal of steady, nonvolatile earnings growth," theinvestigators note in the report's executive summary.

And while Board of Directors chairman Shaun F. O'Malley concedesin a conference call that, "this is a painful day for Freddie Mac,"company officials reiterate their belief that the new leadershipteam--headed by recently installed president and CEO Gregory J.Parseghian, who had been the chief investment officer--will be ableto steady the ship. "Martin Baumann, our new CFO is leading the'charge' to remedy accounting issues at the company," Freddie Macspokesman Douglas Robinson shares with GlobeSt.com. "It's beenreported that we've returned more profits in accounting and we'recontinuing to increase the expertise, knowledge, and depth of ouraccounting control functions. We've shared our remediation plan,with respect to accounting, with our regulators."

Some of those on the outside, looking in, are skeptical aboutFreddie Mac's house cleaning at the top. The report notes that GregParseghian, in his previous role as CIO, was aware of some of thequestionable accounting transactions, but board members havealready concluded that he was made to believe that those dealingswere perfectly valid. Robinson defers to O'Malley's conference callcomments on the matter. "I want to say again that we have the rightchief executive officer in Greg Parseghian leading our business,"O'Malley explains in a statement. "Greg is a person of considerabletalent, deep expertise and unquestioned integrity and he isuniquely positioned to lead our drive toward the highest standardsof financial reporting and disclosure."