Fannie Follies Continues

You would think that a company that has had accounting problems in the last few years, restating billions of dollars over a number of years, would be especially careful when they finally started reporting again right? And this would go double for a company that is a government sponsored enterprise that is highly regulated. Triple for a company that is in the middle of a housing crisis not seen since the early 1990's. I'm right...right?

Not right. Not even close.

Fannie Mae's stock (FNM) is at decade lows, partly after an article in Fortune magazine stated concerns that Fannie Mae was "camouflaging" loan losses. Fannie Mae called an emergency conference call to discuss their "technical accounting questions". Let's just say the call didn't go very well when investors openly questioned the company's executives about being truthful.

Now, I think most of this is overblown. But let's just say accounting isn't my strong suit. I do believe Fannie Mae is not trying to pull the wool over anyone's eyes. If there was a time to report significant losses, it would be now. Even for Fannie or Freddie who are supposed to be limited to exposure to most of these issues, write downs are expected. Fannie did write down and questions surfaced that it should be more.

I don't know what the real answer is. But it would be good for Fannie to be fully truthful in all it's dealings with investors, the government, and the public in general.

With all the changes happening, specifically at Fannie in regards to changing the rules regarding underwriting of their loans and now this...it's definitely not all rainbows and butterflies for Fannie. Which is really, really scary.