A report due this month detailing Fannie Mae's accounting troubles could be delayed into early February as investigators sift through volumes of new documents, some of which were just delivered last week, according to the lead investigator of Fannie's internal probe.
Former Sen. Warren Rudman, who is spearheading the probe, said Wednesday that he's still hopeful he can complete the much-anticipated report by late January as planned.
"The problem we have is more and more documents keep coming in," he said, estimating that forensic auditors and his team of lawyers at Paul, Weiss, Rifkind, Wharton & Garrison have combed through roughly 2.5 million documents in their investigation of accounting and corporate governance deficiencies at Fannie. "Hopefully we can keep [to January]. If not, we're hoping within a week to 10 days of that...I don't want to issue a supplemental report if I" can avoid it.
Mr. Rudman said he and his team have spent much of the last two and a half weeks revising and trimming drafts of several sections of the final report, which he said will be "hundreds and hundreds" of pages long. "We'll try to have an executive summary that won't take a weekend to read," he said, noting "we're still not finished writing some of the sections themselves."
Fannie Mae's board of directors hired Mr. Rudman to help the board with its internal probe after the company's regulator accused executives in September 2004 of manipulating accounting rules to massage Fannie's earnings.
The Office of Federal Housing Enterprise Oversight, which oversees Fannie and fellow government-sponsored enterprise Freddie Mac, is expected to issue its own report on Fannie's accounting practices late this quarter, according to a spokeswoman for the regulator.
Mr. Rudman previously told Dow Jones Newswires that his report won't include everything forensic auditors and investigators have uncovered in their 16-month probe because the board limited his examination mostly to issues OFHEO directed the board to investigate.
OFHEO specifically directed the board to review a host of accounting and internal control problems at Fannie. As part of that review, OFHEO also asked the board to look at the company's corporate governance structure, executive compensation plans and overall culture.
Mr. Rudman's report will cover all the accounting and corporate governance issues identified by OFHEO as well as new issues investigators found during the probe that haven't been publicly disclosed yet by the regulator or the company, he said last month, declining to give details. He previously noted that he and his team have identified other "issues" that aren't relevant to his inquiry that won't be covered in his report. "We had to cut it off somewhere," he said.
Mr. Rudman said Wednesday that regulators and law enforcement agencies that are also investigating Fannie will likely receive copies of his report before it's publicly released. In addition to OFHEO, the Securities and Exchange Commission, Justice Department and others have launched their own probes into alleged misconduct at Fannie.
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