Business Case Studies,Corporate Governance & Business Ethics Case Study, Flour Corp's Business Ethics Practices: Creating Six Sigma Standards in Staying Corruption-Free

Code : GOV0037

Year : 2005

Industry : Banking, Insurance and Financial Services

Region : USA

Teaching Note:Not Available

Structured Assignment :Not Available

Abstract:
Fannie Mae was created in 1938, by a congressional charter to provide liquidity and support to mortgage lending institutions in the US primary mortgage market. With an asset worth $1 trillion (about 20% of the gross domestic product of the US), it was the second largest financial institution in the US after Citigroup and was well known as a Government Sponsored Eenterprise (GSE). In 2004, an investigation into the accounts of Fannie Mae by the Office of Federal Housing Enterprise Oversight (OFHEO), found that its accounting practices failed to comply with generally accepted accounting principles and that the company had understated its expenses and indulged in 'cookie jar' accounting to show healthy financial statements. In its investigations, the Securities and Exchange Commission found the charges to be true and asked Fannie Mae to correct its accounting practices and restate its profits from 2001 to mid-2004.