Fannie Mae got hammered by the Office of Federal Housing Enterprise Oversight, which issued a 340-page report detailing the mortgage giant's misdeeds and levied $400 million in fines.
"Our examination found an environment where the ends justified the means. There was a systematic effort by senior management to manipulate accounting, reap financial rewards and prevent the rest of the world from knowing about it," said OFHEO Acting Director James B. Lockhart.
One person familiar with the Fannie Mae scandal im'd DealBreaker to say, "If this was a normal company, people would be going to jail."
What makes Fannie Mae so special? Political connections. As Bloomberg puts it in their story on today's announcements:
Congress created Fannie Mae and McLean, Virginia-based Freddie Mac to expand homeownership by increasing mortgage financing. They are the biggest borrowers in the U.S. after the federal government. Freddie Mac in 2003 disclosed $5 billion in accounting mistakes.
Under Raines, Fannie Mae built one of the most potent lobbying machines in Washington, according to lawmakers including Senator Richard Shelby of Alabama, a Republican and chairman of the Senate Banking Committee.
Here's a quick rundown of Fannie Mae stories. The NY Times offers a quick summary of what happened today, with a little background on the scandal. Reuters has a good chronology of Fannie Mae's troubles. And Bloomberg has a longer story providing even more backgrounds and details. And you can read the full 340 page OFHEO report curtesy of the Wall Street Journal [pdf].