McLEAN, Va. - (11/10/05) -- Still recovering from amulti-billion dollar accounting scandal, Freddie Mac announced thisweek it will be forced to shave $220 million off of previouslyannounced first half earnings because of a computer error. ChiefFinancial Officer Martin Baumann said in the course of overhaulingits computer systems, the company discovered that a technologyprogram developed in 2001 was overvaluing interest income accruedon securities backed by variable-rate, home-equity loans Freddiepurchased from private issuers. The error will reduce first halfearnings from roughly $1.6 billion to $1.4 billion, the secondarymarket giant said. As a result of the new accounting glitch, thecompany will delay release of its third quarter earnings, which wasexpected at the end of this month. Freddie Mac has been working forthe past 18 months to try and resolve a $5 billion accountingerror.
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The Jackson, Mississippi, company will use proceeds from the sale of its Fisher Brown Bottrell Insurance unit to restructure its investment portfolio, moving $1.6 billion of low-yield securities off the balance sheet.
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The store-branded card issuer is raising annual percentage rates and adding fees for paper statements to compensate for lost revenue. The Consumer Financial Protection Bureau's new regulation is scheduled to take effect on May 14.
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At the banks' annual meetings, shareholders at both companies struck down proposals that would have split the board chair and CEO roles. Two other proposals also failed to win shareholder support, one concerning energy financing and another on pay gap analysis.
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Congressional Review Act resolutions are ramping up ahead of the 2024 election cycle. Experts say that, although none are likely to become law, the resolutions are still powerful messaging and political tools.
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The ABA is testing an information-exchange network to allow banks to share their fraud data with each other. Companies including Baselayer are also building solutions.
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Republicans on the House and Senate Small Business committees are accusing the SBA of being irresponsible in granting Funding Circle permission to participate in its flagship loan-guarantee program.
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