By ALAN ZIBEL, AP Business Writer
Tue Sep 30, 5:33 AM ET

WASHINGTON - Adding to their woes, mortgage finance giants Fannie Mae and Freddie Mac are facing a federal grand jury investigation into their accounting practices.

The mortgage finance companies said Monday that a federal grand jury in New York is investigating accounting, disclosure and corporate governance issues at Washington-based Fannie and McLean, Va.-based Freddie.

Fannie and Freddie said they received subpoenas Friday from the U.S. Attorney's office in Manhattan as well as requests from the Securities and Exchange Commission that they preserve documents. Fannie Mae and Freddie Mac were taken over by the government earlier this month as their mounting defaults and foreclosures threatened the entire mortgage market.

The government investigation focuses on activities starting in 2007, Freddie Mac said in a statement.

Critics have long questioned the companies' bookkeeping. Last November, for example, a Fortune magazine story said new accounting procedures at Fannie Mae masked potential losses on bad loans.

And several years ago, both Fannie and Freddie were forced to restate billions in earnings after federal regulators discovered accounting irregularities at both companies.


full article - http://news.yahoo.com/s/ap/mortgage_giants_investigations


My rather simple question is Fannie/Freddie are being investigated. What happens if found guilty of fraud (or whatever chg) etc? Who does it ultimately affect? If they can prove they did nothing illegal? (rather dubious, but what if?)

This is the real crisis.

Once the investigations get deep enough into the reality of the colapse of these institutions and several more.

We will find out that a lot of our upper level government officials are involved.

The buy out/bailout (or whatever you call it) would have covered up some of the links.

The fallout from this will be interesting to watch. Bet they have a new proposal real quick. I would say we need to examine that proposal closely cause it is sure to have another attempt to hide the links.