Fannie Mae Executives To Get Fifth DegreeFrom Congress

WASHINGTON - (10/06/04) -- The secondary mortgage market goeson trial here Wednesday when top executives at Fannie Mae testifybefore congressional leaders on the growing accounting scandal atAmerica's second largest financial institution. For not only aremembers of the House Financial Services Committee expected to delveinto the arcane rules governing the financial accounting for one ofthe world's biggest portfolios of financial derivatives, but thevery structure of federal oversight over Fannie Mae and its sistergovernment chartered secondary market-maker, Freddie Mac. Scheduledto testify before the committee are Fannie Mae's chief financialofficer, Timothy Howard, board chair Anne Korologos, and CEOFranklin Raines over allegations of earnings manipulations andmanagement misdeeds. Lawmakers are expected to focus on Raines'assurances to investors a year ago that the biggest player in thesecondary mortgage market had not "undertaken any transactions todistort our true financial condition." Critics are expected totarget Raines' own attestation under the new Sarbanes-Oxley Act tothe accuracy of the company's financial statements.