Freddie's Earnings Plunged in '03

Freddie Mac has announced that its earnings dropped 52% to $4.9 billion in 2003, as the company continues to play catch-up in its financial reporting due to a $5 billion accounting scandal.In 2002, Freddie Mac posted $10.1 billion in profits, which included a $5.3 billion gain in the value of its derivatives. Overall, Freddie had a $39 million gain in the value of its derivative portfolio in 2003. But in the third quarter of 2003, Freddie Mac actually posted a $288 million quarterly loss primarily due to derivatives, which fell in value by $3.1 billion as interest rates rose. The giant mortgage company also revealed that it will not disclose audited 2004 financial results until March 31, 2005. Freddie Mac chairman and chief executive Richard Syron told investors that the company still relies on an army of consultants and manual systems to produce its financial reports. As a result, the government-sponsored enterprise will not provide quarterly reports this year while construction of the accounting systems and internal controls continues. However, Freddie Mac officials will conduct quarterly briefings for investors to provide progress reports and answer questions.