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Essay on The Shakeup at Freddie Mac's
The accounting failure and management shakeup at Freddie Mac have had a "devastating" effect on the reputations of the housing finance giant and its larger rival Fannie Mae and have hurt consumers by pushing up mortgage interest rates, said Fannie Mae's chairman Franklin Raines. In blunt comments nearly two months after Freddie Mac's turmoil came to light, he also said he believed Fannie Mae had unfairly suffered "collateral damage" to its public image and business from the debacle at the other big government sponsored company. Unfair, Raines said, "because unlike Freddie Mac, we didn't do any of these things." (Web,1)
Mortgage-market giant Freddie Mac announced abruptly Monday that it had fired its president because he didn't fully cooperate with an internal review of the company's accounting, now being investigated by federal regulators. The move unnerved Wall Street and raised alarm among lawmakers.
In a surprise shakeup, the government-sponsored company whose stock is widely traded said it had fired the president and chief operating officer, David Glenn, and that chairman and chief executive Leland Brendsel had resigned. Vaughn Clarke, the company's executive vice president and chief financial officer, also resigned.
Freddie Mac said it had dismissed Glenn "because of serious questions as to the timeliness and completeness of his cooperation and candor" with attorneys engaged in January by the board of directors' audit committee to review the accounting problems that span three years.
The company doesn't believe that fraud or criminal misconduct were involved, Freddie Mac's new chief executive officer and president, Gregory Parseghian, told shareholders, financial analysts and reporters in a conference call Monday. Questions were raised during the call about Glenn's diaries, which were said to be missing some pages while others had been altered.
Freddie Mac officials described the diaries as the ousted president's personal records and notes, unrelated to the company's accounting....
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