Congress to probe SEC accountant on Fannie Mae
February 2, 2005
Baker Subcommittee hearing set for next week
A House Financial Services subcommittee plans to further probe home loan giant Fannie Mae's earnings restatement at a meeting next Wednesday in Washington, D.C.
Securities and Exchange Commission chief accountant Donald T. Nicolaisen will testify before members of the Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
Members of the committee, which is chaired by Rep. Richard H. Baker (R-La.), will have the chance to question Nicolaisen about the recent decision that Fannie Mae violated accounting rules.
The SEC opinion followed a special examination by the Office of Federal Housing Enterprise Oversight and led to management changes. The opinion included a recommendation for an earnings restatement, which has been estimated at $9 billion by Fannie Mae.
"This hearing represents the first chance for members of Congress to explore the nature and severity of the Fannie Mae violations since the SEC made a determination about the company's accounting practices," said Baker. "If we're going to move forward with a solution for the inadequate supervision of the housing GSEs, and we will, it's essential for us to admit that there's a problem in the first place and to examine fully the sources and consequences of the problem."
House Financial Services Committee Chairman Michael G. Oxley (Ohio) has pledged to continue his work toward a legislative reform package this Congress. He said, "With any accounting or corporate governance problem, it's important to discover the issues early and to address them directly. In the Fannie Mae case, it took a special examination, a supplemental appropriation, outside accounting consultants, and the SEC to finally determine that there were accounting violations. A world-class regulator would have determined this quickly. We want to build a regulator with the power, independence and funding to confront and to handle such matters."
Scheduled to testify at the hearing is Donald T. Nicolaisen, chief accountant for the SEC.
Copyright 2005 Inman News