Saturday, September 06, 2008

Letter to Senator re: Fannie Mae / Freddie Mac Activities

To all readers: I ask that you read the following and consider sending a similar (or the same) letter to your local senator.

Dear Senator,

I want to express my sincere disgust in the activities of Fannie Mae and Freddie Mac over the past months (and years) regarding the irresponsible and perhaps criminal activities and borderline unethical conduct regarding their most recent overstatement of their capital base.

As a citizen, a husband, and as a hard-working father, I am strongly AGAINST any form of bailing out of the two mortgage giants by the federal government. I believe this would put an undue burden on the taxpayer, and there is no reason why any of us should pay for the mismanagement by questionably criminal executives running those companies.

Further, I would strongly request a criminal investigation into the executives and those running both Fannie Mae and Freddie Mac and I would push for an indictment regarding their activities, the handling of the companies, and their questionable accounting methods.

Additionally, I would request that the accounting standards board also be reformed as I am of the belief that those making the decisions there are unethical and are in favor of those businesses who have broken the law, and that the recent decisions by the board fly in the face of sound accounting methods.

My opinion as a concerned citizen is that the country needs an education in ethics and corporate responsibility. While everybody is touting the poor homeowners who are in foreclosure, who are losing their homes, or those that won't be able to get mortgages if the two mortgage giants fold, we must acknowledge that laws have been broken by both the banks, the mortgage lenders AND the homeowners, regulators have not done their job, and that many of the homeowners are in homes that they got mortgages for based on lying on their mortgage application forms about their income, and by taking mortgages for pieces of property they clearly could not afford. There is no reason the government (and thus the taxpayer) should foot the bill for this kind of irresponsible and unethical conduct.

Thus, I ask that you 1) fight AGAINST the government taking over and/or helping the mortgage giants and let things run their course without government intervention; 2) I ask that you start a criminal investigation into the executives running the companies to hold them criminally responsible for the activities of their companies; and, 3) I ask that you push to reform the recent decisions of the accounting standards board and fight for reformation of the board to return to sound and ethical accounting standards.

6 comments:

rescue37 said...

And what decisions of the board fly in th face of sound accounting methods? Almost all the recent changes deal with disclosing more and presenting more usable information. The board is also in the process of updating the standards to match with International Fiancial Reporting Standards. Which are the standars used through out most of the world.

Zoe Strickman said...

Correction rescue37: The board has dropped the ball when it comes to disclosure and ethics, giving corporations backward ways out of telling the truth and giving corporations a way to continue to misrepresent facts and figures on their disclosures, postponing decisions until 2009 that would force them to disclose the correct numbers. In essence, dropping the ball on honesty and ethics. In other words, social cronyism.

rescue37 said...

and let me also tell you that all those disclosures that are unreadable are written 95% of the time by attorneys. The whole FASB process has politics involved in it, and not only from fortune 500 CEO's. There are times where FASB has wanted to issue a pronouncement on an issue and congessman and senators got involved so certain disclosures would not be required. Additionally, if the company is regulated, the SEC determines a lot of the rules on disclosure. Not all reforms can be done overnight, there is a cost and not only monetary, to get some of these disclosures out. Would you prefer the disclosure this year which would cause a run on a company stock which would lead to increased prices, or would you prefer to wait a year so the public can get educated so when the disclosure comes out, there is more rational action. The disclosures are not meant for day traders and those who like to scan the wall street journal. The major investors already know what's generally going on if they are willing to think.

Zoe Strickman said...

I appreciate your response. Let's just say that I am opposed to politicians getting involved with disclosure issues PERIOD. Facts should speak for themselves, and their consequences should be what they are, PERIOD.

Out of curiosity, rescue37, based on your past comments (rants?) on my blog on other topics, I'm surprised that you have so much to say on this issue. What do you do professionally that you have a knowledge and/or an opinion on this topic?

rescue37 said...

I'm a CPA. Whether you like it or not, there will be politics involved. I cringe everytime new standars come out since they generally mean more work that we won't get paid for since the clients don't care about the extra work needed or want it. The whole sarbanes oxley section 404 work has increased costs for public corps by billions but the tangible savings to the investor are probably negligible. Creative minds will find a way to skirt the edges, whether it be GAAP, SEC reporting or tax law. That's what they are paid for.

rebecca said...
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