Mortgage lender recovers value as sheds false revenues
April 1, 2005
Things haven’t been so good at Freddie Mac since the new millennium began. An investigation found that the second-largest mortgage-finance provider in the United States had understated its earnings by 5 billion dollars in the years 2000 to 2002.
Among the repercussions of that investigation was a major scandal that led to the dismissal of top executives, major changes in accounting procedures and oversight of their operations, and issuance of restatements of earnings for those years.
The investigation and it’s fallout also resulted in a delay of the reporting of Freddie Mac’s earnings for 2004. The report, when it was finally released on Thursday, showed that its net income had dropped by 42 percent, although the fair value of its assets had actually increased by 13 percent.
The report didn’t seem to worry Wall Street; by the middle of the day Thursday, Freddie Mac’s stocks had gained 1.2 percent.
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