DOJ Launches Criminal Probe of Fannie

The Justice Department has launched a criminal probe into accounting irregularities at Fannie Mae, according to a report in the Wall Street Journal.On Thursday morning a DOJ spokesman said he could neither confirm nor deny that an investigation has been opened. A Fannie Mae spokesman had no comment. On Monday, National Mortgage News quoted a key industry source who said, "The manipulation of earnings to pay bonuses is a crime. People go to jail for that." Last week Fannie's regulator, the Office of Federal Housing Enterprise Oversight, accused Fannie Mae of manipulating earnings. One of the most troubling allegations centers on $27 million in bonus money that was paid to its executives back in 1998. OFHEO alleges that Fannie deferred $200 million in expenses to meet earnings-per-share goals, almost to the penny. If the earnings-per-share goal had not been met, the bonus money would not have been paid.