Fannie Mae Agrees To BoostCapital

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WASHINGTON - (09/28/04) -- Secondary mortgage market giantFannie Mae, under fire for accounting lapses, agreed Monday toraise its capital levels. The agreement, announced by the Office ofFederal Housing Enterprise Oversight, will require Fannie to almostdouble its over the next nine months. The agreement will alsorequire the company to recalculate some major transactions all theway back to 2001 and tighten internal controls, but neither thecompany or the regulator said whether it will entail a restatementof earnings, as was required of Freddie Mac for similar accountingshortfalls. OFHEO issued a report last week that found that Fanniehad manipulated its books to meet Wall Street's profit targets bymisstating the value of certain assets and transactions.

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