Securities and Exchange Commission chief accountant Donald Nicolaisen is scheduled to testify this week before a House subcommittee about the commission's decision that Fannie Mae violated accounting rules.
Nicolaisen is slated to appear Feb. 9 before the House Financial Services Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises. The committee, chaired by Rep. Richard H. Baker, R-La., watches over the U.S. capital markets, securities and insurance industries, and government-sponsored enterprises, such as Fannie Mae and Freddie Mac, and oversees the SEC as well as the self-regulatory organizations that police the securities markets.
The SEC opinion, rendered in December, included a recommendation for an earnings restatement, which Fannie Mae has estimated at $9 billion, and led to the ouster of Fannie Mae chief executive and chairman Franklin Raines and vice chairman and chief financial officer J. Timothy Howard. "This hearing represents the first chance for members of Congress to explore the nature and severity of the Fannie Mae violations since the SEC made a determination about the company's accounting practices," said Baker. "If we're going to move forward with a solution for the inadequate supervision of the housing GSEs, and we will, it's essential for us to admit that there's a problem in the first place and to examine fully the sources and consequences of the problem."
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