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by Jody ShennFreddie Mac's latest set of delays in its financial reporting reflects an, apparent shift of priorities, from current reporting to remediation work., The government-sponsored enterprise said Friday that it would not meet, its self-imposed March 31 deadline for releasing full-year 2005 results., does it plan to return to timely reporting of its capital position to its, regulator on a basis compliant with GAAP by next month, as it had, previously, expected., The capital-reporting delay, the more important of the two, surprised, some analysts. Before Friday the GSE had appeared to be on the cusp of, getting its quarterly earnings reports back to a normal schedule. Though it, had not offered a firm schedule for doing so, most observers assumed a, full-year release meant timely earnings reporting from then on., But Martin F. Baumann, Freddie's chief financial officer, said Friday in, infrastructure to the point where it can, support timely, reliable quarterly reporting continues to be an enormously, Edwin Groshans, an analyst at Swiss Reinsurance Co.'s Fox-Pitt, Kelton, Inc., said Freddie told him Friday that it has stepped back from quarterly, reporting because the staff involved with preparing it, at times using, manual, steps, is also working on accounting and controls systems., Ensuring that those systems are in order, and that needed policy updates, For the longer term, this is the, right, Even if Freddie had focused too much in the recent past on putting out, results rather than repairing systems, there were good reasons for doing, The Street doesn't want to have radio silence for three, Full-year results will not be out until May, and even those will not, include an audited annual report. However, Freddie will discuss preliminary, results and future timelines on a March 30 conference call. It said its, goal, now is to start filing GAAP-compliant capital reports with the Office of, Federal Housing Enterprise Oversight and disclosing quarterly earnings in a, timely manner by yearend., Freddie also said it will begin registering its stock with the SEC after, it started putting out timely quarterly reports. It was expected to start, registering next quarter., significant improvement in its method for determining the estimated fair, It will make, Freddie has been collecting thoughts from Wall Street firms on similar, financial instruments that it is feeding into its models for valuing the, essentially untraded assets and obligations, after using less third-party, information in the models previously. It said it does not expect the change, to affect any previously released audited financial statements. (It had, previously revised the modeling for first-half 2005 results.), To be fair, executives have repeatedly warned Freddie's timelines could, prove overly optimistic. Eugene McQuade, the GSE's president, cautioned at, We have an awful lot of work to do, and, Freddie was steadily moving closer to regular earnings releases until a, computer programming error it uncovered in preparing third-quarter results, required a $220 million reduction of past results. Firm third-quarter, results, have yet to be released. Freddie entered a reporting black hole because of, accounting scandal that broke in the middle of 2003., Naturally, some saw Friday's announcement as more ammunition for GSE, critics in policymaking circles., can bolster support for the strict, reformists, who argue the GSEs never really knew what risks they actually, said Robert Lacoursiere, an analyst at Banc of America Securities., However, Fannie Mae has been working on a multiyear restatement since late 2004., In November it said it does not expect to issue the restatement, expected, erase about $10.8 billion of past profits, before July., the restatement, a Fannie spokeswoman said.
Published in American Banker (2006)
...and that needed policy updates...
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