Accounting Scandal, Hurricane KatrinaHurts Freddie Mac
McLEAN, Va. - (06/01/06) -- Freddie Mac reported that net incomeplunged 28% last year to $2.1 billion, or $2.75 a share, because ofcharges related to its ongoing accounting scandal and losses fromHurricane Katrina. The secondary mortgage market giant attributed$220 million to the settlement of shareholder lawsuits related tothe accounting scandal and of $133 million due to defaultedmortgages in the areas devastated by Hurricane Katrina. The companyalso attributed another $265 of charges to changes in accountingrules. At the same time, Freddie Mac, second fiddle in thesecondary market to Fannie Mae, said it increased its share ofgovernment sponsored enterprise mortgage securitizations to 45%last year from 41% in 2004.