WOO HOO! WOO HOO! WOO HOO! WOO HOO!

June 9, 2003, 10:33PM

[url=www.chron.com/cs/CDA/ssistory.mpl/business/1944355]Freddie Mac president gets boot[/url]

Two others at top leave as accounting reviewed
Associated Press
WASHINGTON -- Mortgage-market giant Freddie Mac announced abruptly Monday that it had fired its president because he didn't fully cooperate with an internal review of the company's accounting, now being investigated by federal regulators.

The move unnerved Wall Street and raised alarm among lawmakers.

In a surprise shake-up, the government-sponsored company whose stock is widely traded said it had fired the president and chief operating officer, David Glenn, and that Chairman and Chief Executive Leland Brendsel had resigned. Vaughn Clarke, the executive vice president and chief financial officer, also resigned.

Freddie Mac said it had dismissed Glenn "because of serious questions as to the timeliness and completeness of his cooperation and candor" with attorneys engaged in January by the board of directors' audit committee to review the accounting problems that span three years.

The company doesn't believe that fraud or criminal misconduct were involved, Freddie Mac's new chief executive officer and president, Gregory Parseghian, told shareholders, financial analysts and reporters in a conference call Monday.

Questions were raised during the call about Glenn's diaries, which were said to be missing some pages while others had been altered. Freddie Mac officials described the diaries as the ousted president's personal records and notes, unrelated to the company's accounting.

Freddie Mac shares dropped 16 percent, or $9.61, to close at $50.26 each on the New York Stock Exchange.

A spokesman for the Securities and Exchange Commission, Herb Perone, declined to comment on whether the agency was investigating or planned to investigate Freddie Mac's accounting. The company voluntarily agreed last July, amid the scandals and a push for corporate responsibility, to begin filing audited annual and quarterly financial reports to the SEC. It had been exempt from the disclosure requirements that apply to most publicly traded companies.

On Capitol Hill, the chairmen of the House Financial Services Committee and the Senate Banking Committee asked Freddie Mac officials and federal regulators to explain the sudden move.

"This is an extremely troubling development," said Rep. Richard Baker, R-La., chairman of a Financial Services subcommittee and a longtime critic of Freddie Mac and Fannie Mae, its larger sister in the multibillion-dollar home-mortgage market.

"If there has been fraud, we will ferret it out and find the guilty parties, but if there are further problems with management practices and controls, we must address them as well," Baker said.

In January, Freddie Mac restated its earnings for 2000-2002, after its new auditor recommended changes to its accounting policies to reflect higher earnings from the complex financial instruments called derivatives.

The company, with 3,900 employees, is based in McLean, Va. It had $5.8 billion in revenues and assets of $617 billion in 2001. Freddie Mac boasts that it bought a mortgage every 11 seconds that year -- $384 billion of single-family mortgages -- double the rate in 2000.

The federal agency that oversees Freddie Mac, the Office of Federal Housing Enterprise Oversight, is investigating the company's accounting. In a letter to the company over the weekend, agency Director Armando Falcon said he has "become increasingly concerned about evidence that has come to light of weakness in controls and personnel expertise in accounting areas and the disclosure of misconduct on the part of Freddie Mac employees."

Falcon warned that sacking members of the management team "only goes a part of the way toward correcting serious problems -- concerns surrounding management practices and controls remain. I believe additional actions must be taken by the board to address these matters."

many have been waiting for this operation to collapse for some time.

go feds!!

What does this have to do with GW?

LOL The_Macallan! I too was waiting for the part where ol' Dubya would somehow be connected to this also. Maybe Imbroglio will add that part later. Haha.

too soon to tell if there is any reason for real economic impact. may just be politics at work. but, it is a huge operation and bears watching.

It has to be his fault somehow.  Brog is just leaving it to our imagination, as his has failed.