Whoops, just a little off there- just 10.8 Billion more than most people can imagine- in their wildest dreams! hahahahhaha- I went to college with a Bob Blakely- wonder if it's him- old money San Diego Ca!
Date: 11/11/2005 10:34:38 AM ( 16 y ) ... viewed 1326 times
Fannie Mae Finds $10.8B in Errors
The nation's largest mortgage lender also names MCI executive vice president and CFO Bob Blakely as its new chief financial officer.
Stephen Taub, CFO.com
November 10, 2005
Fannie Mae has disclosed $10.8 billion in accounting errors stemming from its derivatives and hedging activities.
The nation's largest mortgage lender also named Bob Blakely chief financial officer. He joins Fannie Mae from MCI Inc., where he served as executive vice president and CFO since April 2003. Blakely, who oversaw MCI's restatement and restructuring of the finance, accounting, and controls functions, was previously executive vice president and CFO of Tenneco and of Lyondell Chemical, and a managing director of Morgan Stanley.
Fannie Mae discovered its accounting errors while reviewing its accounting policies and practices, according to a regulatory filing, and is "working to quantify the financial statement impacts of these errors."
The company expects to record a net cumulative after-tax loss of about $8.4 billion as of December 31, 2004, after discovering that it misapplied hedge accounting under FAS 133, Accounting for Derivative Instruments and Hedging Activities, for certain of its derivatives. This loss is an estimate, subject to change as a result of other accounting issues under review, the company added.
Fannie Mae also stated that it will record an estimated $2.4 billion loss because it misapplied cash-flow hedge-accounting criteria for its mortgage commitments.
"We expect that the impact of the misapplication of derivative accounting rules will be material to Fannie Mae's previously reported results for many, if not all, periods and will vary substantially from period to period based on the amount and types of derivatives held and fluctuations in interest rates and volatility," the company elaborated.
As part of its ongoing accounting review, Fannie Mae is also evaluating whether a portion of the securities in its portfolio should be reclassified as "trading." If so, unrealized gains and losses on those securities for each period will be recorded as a component of earnings, it added.
The company doesn't expect to complete its 2004 annual report "prior to the second half of 2006."
As for new CFO Bob Blakely, he will assume overall responsibility for the company's massive restatement. Commenting on Blakely's appointment, chairman Steve Ashley said that "the board wanted an individual of deep, broad, and strong experience at the highest levels in corporate finance, management, accounting, internal controls, and the capital markets. We also wanted a CFO with experience in assisting a major company to rebuild and renew its finances, restore market confidence, and exemplify a culture of service and integrity."
Fannie Mae also appointed interim CFO Rob Levin as the company's first chief business officer, reporting to chief executive officer Daniel Mudd. Levin, who joined Fannie Mae in 1981, has also served as senior vice president of mortgage-backed securities and senior vice president of corporate finance. In addition, Mike Williams was named chief operating officer.
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