X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON, DC-Franklin Raines has retired from the position of chairman and CEO at Fannie Mae, and vice chairman and CFO J. Timothy Howard resigned from the lender. To replace them, board member Stephen B. Ashley will become the non-executive chairman of the board, vice chairman and COO Daniel H. Mudd will serve as interim chief executive officer and EVP Robert Levin will serve as interim CFO.

The board of directors is working with executive search firm Spencer Stuart to find permanent replacements. The audit committee also dismissed KPMG LLP as the company’s independent auditor and has begun a search for a new auditor.

The moves come after a rough few months for the company. In September, the Office of Federal Housing Enterprise Oversight released a report based on an eight-month investigation concluding that the government-sponsored enterprise had manipulated earnings and engaged in dubious accounting practices.

And in a Form 8-K filing to the Securities and Exchange Commission in October, the company noted that eight lawsuits against it have either been filed or are in the process of being prepared. Holders of the housing mortgage lender’s securities are behind the lawsuits, which, for the most part, accuse Fannie Mae of securities violations with regard to recently scrutinized accounting procedures. Raines and Howard were both named in the suits that had been officially filed at that time.

“I previously stated that I would hold myself accountable if the SEC determined that significant mistakes were made in the company’s accounting,” Raines says in a statement. “Although, to my knowledge, the company has always made good faith efforts to get its accounting right, the SEC has determined that mistakes were made. By my early retirement, I have held myself accountable.”

Ann Korologos, the presiding director of the non-management members of the board, says Fannie Mae’s board “takes these steps today to move the company forward to serve its critical mission in a safe and sound manner. Together, we will continue responding to the issues identified by OFHEO to ensure that the Fannie Mae of tomorrow is safe, sound, stable and even more able to achieve its mission.”

The board says it continues to move forward to comply with OFHEO. Measures taken so far include the hiring of independent organizational and compensation consultants; submission and approval of a detailed implementation plan for the agreement; and submission of detailed work plans for the organizational and compensation reviews. Board member Donald B. Marron will continue leading the work on the company’s capitalization plan.

The board further said that the independent investigation commissioned by its Special Review Committee is proceeding to look into the findings of OFHEO’s report. The investigation is focused on accounting issues including accounting policies procedures and controls regarding FAS 91 and FAS 133, organization, structure and governance, board oversight and management responsibilities and resources and executive compensation.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2022 ALM Global, LLC. All Rights Reserved.