JURIST - Paper Chase: Department of Justice investigating Fannie Mae accounting practices

Mortgage giant Fannie Mae announced Tuesday that the Department of Justice is investigating whether it broke accounting rules to smooth earnings and boost executive bonuses. The US Attorney for the District of Columbia has asked the company to save documents related to the accounting abuses. The SEC opened a probe into the company last month. Fannie Mae also announced eight separate lawsuits have been brought against the company in US District Court for the District of Columbia and the US District Court for the Southern District of New York. The cases will likely be consolidated into a securities class action suit. The problems at Fannie Mae began when the Office of Federal Housing Enterprise Oversight (OFHEO) issued a report that stated the company was using faulty accounting. Read the OFHEO report on Fannie Mae here [PDF]. Reuters has more.

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