Accounting Confusion Hurt Freddie
Looking at the latest report from Freddie Mac on its accounting problems, I could not suppress a perverse thought: I'd almost feel better about Freddie Mac if the place had been run by the same kind of crooks who caused the Enron and WorldCom scandals.</br></br>You can understand how crooks could screw up a company's books so thoroughly that scores of accountants, after working for six months, still haven't figured up how much money Freddie has been making.</br></br>But Freddie's finances apparently are in chaos not because of nefarious intent, but because some of the smartest people in the mortgage business and some of the best accountants didn't know what they were doing.</br></br>They've given a range of estimates -- $3 billion apart -- of how much income wasn't reported. After taxes, it might have been $1.5 billion more than reported, it might have been $4.5 billion.</br></br>Freddie's finances are such a mess that the accountants are reexamining several hundred thousand transactions, because they don't know what they are.