Freddie Mac Relapses On AccountingRehabilitation
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.