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Mix-Ansicht- Freddie hat Probleme, seine Bilanz zu revidieren - Verschiebung angekündigt - kingsolomon, 25.09.2003, 21:30
Freddie hat Probleme, seine Bilanz zu revidieren - Verschiebung angekündigt
-->Freddie MaFreddie Mac Delays Earnings Restatement
By Chris Sanders
NEW YORK (Reuters) - Freddie Mac (NYSE:FRE - news) on Thursday delayed the restatement of its earnings by two more months and said the size of its accounting problems could be much bigger than it previously stated.
The restatement could now be more than the $1.5 billion to $4.5 billion range it had previously announced.
The No. 2 U.S. mortgage finance company has been stung by a financial scandal relating to how it accounts for derivatives to smooth its earnings that led to the firing of its top management since June.
The company had previously said it would release its restated results on Sept. 30, but extended the deadline to November.
Freddie Mac said it was having problems with computer system changes that it needs to put in place to account for asset transfers and securitizations. Securitizations involve the sale of pools of home loans to create mortgage-backed securities.
"It's a disappointment, but not a disaster," said Chris Buonafede, an analyst at Fox-Pitt Kelton. But he was surprised about the length of the delay. He has a"buy" rating on Freddie's stock.
In a statement, Chief Financial Officer Martin Baumann said,"This delay does not result from new accounting errors. We regret the need to extend our restatement deadline of September 30, but our No. 1 priority has been -- and continues to be -- getting our financial statements right."
In Washington on Thursday, several housing agencies are testifying before Congress on government oversight of them. Critics have said the U.S. government should strengthen its regulation of the agencies and possibly curtail the benefits they enjoy.
Shares of Freddie Mac fell 1.3 percent, or 68 cents, to $52.60 in morning trading on the New York Stock Exchange (news - web sites).
In addition to restating its accounting for derivatives, the company reiterated it will change the way it classifies certain securities, how it accounts for asset transfers and securitizations and its valuation of financial instruments.
In August, Freddie Mac Chief Executive Gregory Parseghian -- who took over in June after the company replaced its top three executives over accounting irregularities -- said he would leave the company as soon as a successor is found after Freddie's regulator, the Office of Federal Housing Enterprise (news - web sites) Oversight (OFHEO), determined he may have been too close to controversial transactions aimed at smoothing earnings.
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On Wednesday, OFHEO said it would push back to October the release date of its investigation of Freddie Mac.
The regulator had said it would make public at the end of September the results of its inquiry into an accounting scandal at Freddie Mac. The report is now likely to be out in mid-October, a spokeswoman told Reuters.
OFHEO itself has been under fire from lawmakers, who say it should have acted sooner to deal with problems at Freddie Mac.
Fannie Mae and Freddie Mac are shareholder-owned companies chartered by Congress to expand homeownership.
The two companies owned or had financed 45 percent of the $7.2 trillion U.S. mortgage debt outstanding as of the end of March.
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