Did Fannie Manipulate Earnings?

The Office of Federal Housing Enterprise Oversight has found evidence of a "pattern of decisions" made by Fannie Mae executives "aimed at manipulating earnings to present a smoother" profit performance, according to a report by The Wall Street Journal.The newspaper said it based its reporting on "people who have been briefed" on the findings of an eight-month-old forensic accounting probe of Fannie by OFHEO. The regulator is scheduled to brief Fannie's board Monday on some of its findings. As of MortgageWire's deadline, Fannie had no immediate comment. OFHEO's chief spokeswoman could not be reached for comment. An analyst report issued by Sandler O'Neill said it would be "surprised" if OFHEO found at Fannie any "issues even remotely similar to those found at Freddie Mac." Freddie Mac last year suffered through a $5 billion accounting scandal over the suppression of earnings in order to use the money for future periods. OFHEO has been conducting a special examination of Fannie Mae, focusing on its accounting practices and policies. Fannie's accounting treatment of manufactured housing securities is one area the regulator is looking at.