A To-Do List for Fannie Mae

Fannie Mae (FNM) has to be one of the most disappointing stocks in recent years. It wasn’t that long ago that Fannie was regarded as one of the best stocks on Wall Street. The stock has slid from nearly $80 a year ago to $60 three months ago, to $41 today. What does it have to do to get back on track? Business Week has a to-do list.

No, Fannie Mae is not about to implode. Despite late September news stories alleging extensive new accounting violations and a drop from $77 to $41 in the stock price in the past year, the nation’s largest mortgage-finance company is well-capitalized enough to handle any downturn in the housing market and is probably still profitable, say analysts.
Only probably still profitable? That’s merely most analysts’ best guess, since Fannie doesn’t have any recent earnings statements for them to review. In December, 2004, regulators required Fannie to admit that it had broken accounting rules and to promise to restate past results. It has yet to reissue clean statements for 2004 — or file any new ones since last December.
Fannie’s investor relations Web site includes this startling disclaimer: “Investors and others should no longer rely on Fannie Mae’s previously issued annual and quarterly financial statements.”

Posted by on October 6th, 2005 at 9:50 am


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