Fannie Mae Officials Refute FraudAllegations

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WASHINGTON - (10/07/04) -- Top executives at Fannie Mae deniedallegations of cooking the books during a highly chargedcongressional hearing Wednesday, telling angry lawmakers theSecurities and Exchange Commission will be the final judge ofwhether they engaged in wrongdoing. The top Fannie executives,including CEO Franklin Raines, CFO Timothy Howard and AnnKorologos, chairman of the board, blamed disagreements over arcaneaccounting rules that prompted allegations by the company's chiefregulator, the Office of Federal Housing Enterprise Oversight, thatthe company manipulated its finances to please Wall Street andqualify top executives for multi-million dollar bonuses "We candiscuss forever, but the SEC's going to decide," Raines toldmembers of the House Financial Services Subcommittee on GovernmentSponsored Enterprises. Prior to Raines' testimony, Armando Falcon,director of OFEHO, detailed allegations that Fannie auditorsstruggled to meet previously agreed-upon profit targets, sometimesachieving them by fractions of a cent, which entitled topexecutives to lucrative bonuses. Raines almost broke down near theend of a four-hour grilling by committee members, telling them hisdaughter offered him support through the spreading publiccontroversy, "when I should be offering her support," he said,almost breaking into tears.

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