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WASHINGTON, DC-"Grossly inadequate" internal accountingprocedures put in place by now ousted executives that led to FannieMae's $11 billion restatement of earnings, an official externalstudy has concluded. The nearly 2,700-page Report to the SpecialReview Committee of the Board of Directors of FannieMae--spearheaded by one-time Sen. Warren Rudman and the law firm ofPaul, Weiss, Rifkind, Wharton & Garrison--was based upon anearly 18-month investigation. For previous GlobeSt.com coverage,clickhere.

The report finds that Fannie Mae former chief financial officerTimothy Howard and former controller Leanne Spencer institutednegligent accounting practices leading back to 2001. In 2004, theOffice of Federal Housing Enterprise Oversight raised a series ofquestions about Fannie Mae's accounting and internal governance inits own investigation.