Fannie Mae

Raines is finally out at Fannie Mae. The company seems to be in increasing difficulties, with recent investigations by regulatory agencies finding that Fannie Mae has hidden about $9 billion in losses over the past few years, basically by using the same accounting trick that WorldCom used a few years ago. It’s unclear at this point how much of this Raines is to blame for, but it is increasingly clear that we’ll be reading more bad news about Fannie Mae through 2005. And because of Fannie Mae’s sheer size (about $1 trillion each in assets and liabilities), bad news for Fannie Mae could well mean bad news for the US’s financial system in general.