Fannie Mae accounting restatement fuels debate

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The Federal National Mortgage Association (Fannie Mae) has slashed its $10.8 billion accounting adjustment related to derivatives contracts by a "significant" amount. Daniel Mudd, president and chief executive of Fannie Mae, says the firm's March estimate of mortgage-related derivatives losses did not account for the gains on the contracts made prior to mid-2003, when it adopted US accounting standards for derivatives instruments and hedging activities.

"We believe the net effect of restating