This past week was Freddie Mac accounting scandal, week No. 2. On Monday National Mortgage Newswill publish an update on the "Glenn Diaries." The long and short of it: Freddie wants them out, butrecently fired president David Glenn does not. Mr. Glenn and his attorney have yet to discuss the diaries.Chances are criminal investigators will get their hands on the scribblings before the public sees them. Sourcessay there could be non-business-related information in the diaries that some folks may not want released. Meanwhile,another law firm is suing the company on behalf of shareholders who saw the value of their Freddie Mac stock getclobbered on June 9 and the days that followed. The latest lawsuit (latest as of Friday afternoon) comes from thelaw office of Alfred G. Yates in Pittsburgh. Filed in Federal Court in Lower Manhattan, the complaint accusesFreddie of failing to properly account for hedges, smoothing out earnings, and providing investigators with "incompleteand altered" documents, among other charges.
KENT COLTON PHONE HOME: Over the past few years Kent Colton, former head of the National Associationof Home Builders, has been advising now-former Freddie Mac chairman Leland Brendsel on congressionalrelations. It is not known, in the wake of Mr. Brendsel's sudden retirement on June 9 (the day Mr. Glenn was fired),whether Mr. Colton (a former Freddie Mac official in the early 1980s) is still working for the company. He wouldnot return telephone calls.
THE HEARING OF THE YEAR: If the Freddie Mac accounting scandal/firings interests you, check out Wednesday'shearing on Capitol Hill, room 2128, Rayburn. Rep. Richard Baker, R-La., a long-time critic of Fannie Maeand Freddie Mac chairs the GSE Subcommittee. As of Friday afternoon there was no word on who might testify.
A CONINCIDENCE ON STOCK SALES?: Reps. Edward Markey, D-Mass., and Chris Shays, R-Conn.,want to know whether the Securities and Exchange Commission is going to investigate stock sales by FreddieMac officials on and around June 5, four days before the firing of Mr. Glenn and the sudden retirement of Mr. Brendselbecame public. Those selling include Mr. Glenn and four individuals who still work for Freddie: Melvin Kann,Maud Mater, William Ledman and Paul Peterson. Freddie says the shares sold were partof a predetermined sale of restricted stock. The stock apparently was sold to an in-house account and not the public.In other words, Freddie says the sales, in relation to the firing/retirement news, was merely coincidental.
OTHER NEWS: General Motors last week renewed its five-year credit facility which means the company-- the parent of GMAC Mortgage and GMAC Commercial Mortgage -- now has full access to a $5.6 billionline of credit with a syndicate of banks. The facility is committed through June 16, 2008. No news yet on the saleof GMAC Commercial...
Homebuilder KB Homes said on Thursday historically low mortgage rates helped the company increase quarterlyearnings by 27%, topping analysts' estimates, and prompted the company to raise its outlook for the year. KB Homes(it also owns KB Mortgage) said it expects to continue to benefit from strong demand and a limited supplyof land...
