Testifying with blatant honesty before the Senate Banking Committee, Fannie Mae's top executives said it will be years before the mortgage giant can recover from an accounting scandal.

Acting director of the Office of Federal Housing Enterprise Oversight James Lockhart, which issued a critical report of the government-charter lender last month, added in his testimony that he believes Fannie Mae is moving "disappointingly slow." And adding his voice to the choir, Securities and Exchange Commission Chairman Christopher Cox said the company's fading stock price had caused a fair about of concern among investors.

Fannie Mae's president and chief executive, Daniel Mudd, alongside Chairman Stephen Ashley, testified that the Fannie Mae of today is nearly unrecognizable from before. Late last week, Mudd has volunteered to return some of his salary from during the period that the accounting irregularities occured. Mudd served as Fannie Mae's chief operating officer from 2000 through 2004.

On Tuesday, the departments of Treasury and Housing and Urban Development said they were starting reviews of the two companies that could result in limits on their growth and their expansion into new areas of business.

Previously on WebCPA:

Fannie Mae to Pay $400M to Settle Misadventures in Accounting (May 24, 2006)

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