In a statement released last week by presiding director Ann McLaughlin Korologos, the board said the Office of Federal Housing Enterprise Oversight has questioned the “validity of previously reported financial results, the adequacy of regulatory capital, the quality of management supervision”, as well as the “overall safety and soundness” of the Congressionally-chartered company.
Following the announcement Fannie Mae's stock was trading down almost 7% at $70.45. Fannie Mae chairman and chief executive Franklin Raines says the company's management strongly supports the leadership shown by the non-management members of its board.
In another development, last week Fannie Mae outside director Anne Mulcahy, chief executive of Xerox Corp, resigned. She had been a director since 2000 and was recently asked to join the board of Citigroup.