It wasn't the best of all possible times to announce that their third quarter earnings required adjustment, but that is what Fannie Mae did on October 29. Fannie characterized the corrections as "computational errors," indicating that the changes resulted in increases to unrealized gains on securities. Fannie's now ever-vigilant but still beleagured regulator, the Office of Federal Housing Enterprise Oversight, immediately jumped in to indicate they are evaluating the circumstances surrounding the accounting error.
This unfortunately timed accounting glitch is not expected to revive consideration of legislation that would put Fannie and Freddie Mac under Treasury supervision and regulation … and yes, political control. We will forever remain puzzled about America's Community Bankers' fervent support of merging the OFHEO and the FHFB into a new agency in the Treasury Department. During the upcoming congressional recess, we hope that ACB reflects on the National Association of Homebuilders' October 23 warning that "the Treasury Department, be it under Republican or Democratic leadership, would prefer to redirect capital away from housing into other sectors of the economy and that the agency does not have housing's best interests in mind."