Blaming a computer for accounting errors, mortgage financier Freddie Mac announced that it has cut about $220 million in profits from its statements for the first half of 2005.
Freddie said that it earned $1.4 billion in the first six months of 2005, not the $1.6 billion it reported on Aug. 31. In a statement, the company said the difference "reflects the correction of interest accruals recorded for certain mortgage-related securities stemming from miscalculations since 2001 in a legacy computer system." The company also pointed out that the amended profit represents less than 1 percent of its core capital as of June 30.
Still recovering from a 2003 accounting scandal, Freddie Mac said that it still expects to resume regular financial reporting early next year. The company plans to release fourth-quarter and full-year 2005 results and begin filing monthly capital reports to regulators no later than the end of March 2006.Freddie Mac has said that it understated profits from 2000 until 2002 by $5 billion in an attempt to reduce earnings volatility. The August release was Freddie Mac's first public earnings disclosure since the company's restatement of those profits, which led to the dismissal of two chief executives, payment of a $125 million Securities and Exchange Commission fine and the introduction of legislation in Congress to tighten federal regulation of the company.
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