WHY FREDDIE'S MESS MATTERS

摘要

On June 9, Freddie Mac revealed one of the biggest corporate scandals of the year. The mortgage-finance giant fired President David W. Glenn for allegedly failing to cooperate with outside lawyers hired to probe its accounting. Freddie's CEO and CFO were also forced to resign. Now, the U. S. Attorney in Northern Virginia has launched a criminal probe, the Securities & Exchange Commission a civil investigation, and Congress a probe into why Freddie's regulator was asleep at the wheel. The big worry is that Freddie's problems could turn out to be so severe that they rock the mortgage markets and snuff out the huge refinancing boom that is keeping consumers―and the economy―afloat. Freddie is huge in mortgages: Last year, it bought $642 billion worth of them, a quarter of all issues. In January, it disclosed that its new auditors found mistakes in its accounting for derivative contracts and said it would restate up to three years of results.