Fannie Mae earnings filing delayed
US mortgage agency Fannie Mae will not file its third-quarter earnings report on time, and may be hit with approximately a $9.0 billion loss if an investigation into its accounting practices reveals it did not qualify for hedge accounting, the organisation announced yesterday.
According to the mortgage giant, completion of the review by KPMG is subject to resolution of its accounting issues and the independent auditor’s “completion of certain other procedures, including its evaluation of results that are not yet available of the investigation of certain matters in the Ofheo report”, dated September 20.
In addition, Fannie Mae may needs to restate its financial results for previous periods if the Ofheo examination reveals it did not qualify for hedge accounting. “The effect on current and past Generally Accepted Accounting Principles (GAAP) and core business earnings would be significant,” stated Fannie Mae. “If Fannie Mae does not qualify for hedge accounting for all periods since its January 1, 2001 adoption of FAS 133, the company estimates it would be required to record in earnings a net cumulative after-tax loss on its derivatives transactions of approximately $9.0 billion as of September 20, 2004,” the release stated.
Under hedge accounting, an organisation can defer gains and losses to the extent the “hedge” is effective. Under question is whether Fannie Mae wrongly assumed “perfect effectiveness” for many of its hedges.
In related news, Fannie Mae will release its October 2004 Monthly Financial Summary report - containing business volumes, delinquency rates and interest rate risk disclosures - on November 19.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
FCMs warn of regulatory gaps in crypto clearing
CFTC request for comment uncovers concerns over customer protection and unchecked advertising
UK clearing houses face tougher capital regime than EU peers
Ice resists BoE plan to move second skin in the game higher up capital stack, but members approve
ECB seeks capital clarity on Spire repacks
Dealers split between counterparty credit risk and market risk frameworks for repack RWAs
FSB chief defends global non-bank regulation drive
Schindler slams ‘misconception’ that regulators intend to impose standardised bank-like rules
Fed fractures post-SVB consensus on emergency liquidity
New supervisory principles support FHLB funding over discount window preparedness
Why UPIs could spell goodbye for OTC-Isins
Critics warn UK will miss opportunity to simplify transaction reporting if it spurns UPI
EC’s closing auction plan faces cool reception from markets
Participants say proposal for multiple EU equity closing auctions would split price formation
Fed pivots to material risk – but what is it, exactly?
Top US bank regulator will prioritise risks that matter most, but they could prove hard to pinpoint