OFHEO Imposes Corrective Actions and $125 Million Penalty On Freddie Mac
|December 10, 2003|
Report of the Special Examination of Freddie Mac
WASHINGTON , D.C. ? Armando Falcon , Jr., Director of the Office of Federal Housing Enterprise Oversight (OFHEO), has announced that Freddie Mac has agreed to implement corrective measures and pay a civil money penalty of $125-million dollars as part of a Consent Order with OFHEO. The actions come as OFHEO released a report detailing a pattern of inappropriate conduct and improper management of earnings that led to the company's recent restatement.
?A government sponsored enterprise like Freddie Mac lives on a public trust that should never be violated,? said OFHEO Director Falcon. ?OFHEO will take strong action against an enterprise and responsible individuals if that trust is ever broken.?
Among the findings in the OFHEO report:
The report also recommends specific actions for the agency to implement, including:
While conducting its investigation, OFHEO took numerous actions regarding present and former executives at the enterprise. These included: the freezing of compensation packages, removal of the CEO and General Counsel, the levying of a civil money penalty on the former Vice Chairman, and beginning the process of terminating the former CEO and CFO for cause.
The $125-million dollar penalty in the Consent Order is the largest civil money penalty by a safety and soundness regulator. Some of the recommendations in the OFHEO report are also part of the Order.