ASHINGTON, Sept. 23 - After harshly criticizing Fannie Mae for improper accounting practices in a 211-page report, federal regulators said on Thursday that they had raised the possibility of a management shake-up at the mortgage giant to clean up its culture and finances.--snip--
Although the Securities and Exchange Commission remains the ultimate judge in the accounting irregularities raised by the oversight agency, the smaller agency still can apply political pressure on the two government-chartered but publicly traded mortgage companies, which have been criticized for using their close relationship with the federal government to profit and wriggle away from harsher regulation.
Freddie Mac and Fannie Mae, created by Congress to boost home ownership, have a line of credit with the Treasury, an implicit government backing that helps the firms to borrow more cheaply than other lenders.
In recent years, regulation of the mortgage companies has emerged as a somewhat partisan issue, with a number of prominent Republicans, including Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan, saying that their important financial role and rapid growth should generate tighter financial scrutiny.
As the companies have developed an adversarial relationship with the Bush administration and other Republicans, the political donations from employees of the two companies have begun to favor Democrats, according to the Center for Responsive Politics, a nonpartisan group that tracks campaign donations.
Congressional Democrats have resisted the tightest efforts to regulate the two companies, arguing in part that restrictions may interfere with the companies' role in promoting access to low-income housing.