Fannie Mae Probe Points to Top Execs

By Marcy Gordon, Associated Press

An extensive investigation of embattled Fannie Mae points to its former finance chief and controller as mainly responsible for the accounting failures at the mortgage giant now struggling to emerge from an $11 billion scandal, said a report released Thursday.

The report by a team of investigators led by former Sen. Warren Rudman also found that former chairman and CEO Franklin Raines, while not sharing direct responsibility, contributed to a culture of arrogance at the government-sponsored company. The report comes about 17 months after the revelation that federal regulators had discovered violations of accounting rules and earnings manipulation by the company to meet Wall Street targets.

The board of Fannie Mae, which finances one of every five home-mortgage loans in the United States, hired Rudman, a former member of the Senate from New Hampshire, as independent counsel to launch an investigation at the time of the stunning disclosures in September 2004.

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