David Glenn was fired as chief operating officer because of “serious questions as to the timeliness and completeness of his cooperation and candor with the Board’s Audit Committee counsel, retained in January 2003 to review the facts and circumstances surrounding the principal accounting errors identified during the restatement process.”
NAHB President Kent Conine cautioned the media, Wall Street and housing market participants against overreacting to the change in leadership at Freddie Mac. “We are fully confident in Freddie Mac’s underlying financial strength and its ability to continue to serve as one of the key cornerstones of the U.S. housing finance system,” he said.
Conine noted that a statement by the head of the Office of Federal Housing Enterprise Oversight — the federal safety-and-soundness regulator for Freddie Mac — said that “Freddie Mac's business fundamentals, asset quality, capital positions and other safety and soundness measures remain strong.”
Freddie Mac said that it expects “the likely cumulative effect of the (income) restatements will be to materially increase reported earnings for prior periods and materially increase the corporation’s capital surplus under its regulatory minimum capital requirements as of the end of 2002. The company further expects significant volatility in reported quarterly earnings for those periods … and expects that adjustments affecting its income will relate substantially to changes in the timing of income recognition, and, as a result, cumulative increases related to the adjustments will have offsetting effects in future periods. In addition, the company expects increased volatility in future periods.”
Parseghian, who previously served as executive vice president/chief investment officer, said that the restatement process would probably be completed in the third quarter of this year.
“Job number one is to get our financial statements right,” he said. “We are committed to providing re-audited financial statements to the market as soon as possible and to taking any and all steps necessary to ensure that our people, processes and controls are of the highest caliber going forward.”
Peterson, who has been named as the new COO, was previously executive vice president for Freddie Mac’s single-family operations.
O’Malley is the retired chairman of Price Waterhouse LLP, where he was chairman and senior partner from 1988 to 1995.
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