Congress Seeks Referee In Fannie MaeAccounting Dispute

WASHINGTON - (10/08/04) -- Congress has called on the FinancialAccounting Standards Board, which sets accounting rules forpublicly owned companies, to determine whether secondary mortgagemarket giant Fannie Mae violated accounting standards on itsfinancial statements as alleged by federal regulators. In a letterto Robert Herz, chairman of the FASB, Rep. Michael Castle ofDelaware asked whether Fannie Mae's accounting for its derivativesportfolio and mortgage-backed securities comply with the relevantFASB rules, FAS 133 and FAS 91. Top Fannie officials told Castleand other members of the House Financial Services CommitteeWednesday they disagreed with allegations brought by the Office ofFederal Housing Enterprise Oversight that its accounting violatedthe FASB rules and was looking to the Securities and ExchangeCommission for a final determination. "I am concerned that twodifferent auditors would have different interpretations of FAS 91and FAS 133," wrote Castle to the FASB Chairman. "I wouldappreciate your comments on whether Fannie Mae's accountingpractices, as described by OFHEO, are in compliance with therelevant FASB standards."