Probe launched into activities at Fannie Mae, Freddie Mac
Last Updated: Monday, September 29, 2008 | 12:11 PM ET
CBC News
A U.S. grand jury is investigating accounting and disclosure issues at giant mortgage finance companies Fannie Mae and Freddie Mac, the firms said Monday.
The companies said they received subpoenas Friday from the U.S. Attorney's office in Manhattan as well as requests from the Securities and Exchange Commission that they preserve documents.
Fannie Mae and Freddie Mac were taken over by the government earlier this month as their mounting defaults and foreclosures threatened the entire mortgage market.
Freddie Mac said the government investigation focuses on activities starting in 2007. Both companies said they would co-operate fully.
Three weeks ago, the government seized control of the two biggest U.S. mortgage finance companies with a rescue plan that could require the Treasury Department to inject as much as $100 billion US into each to keep them afloat.
Law enforcement officials said last week that the FBI is looking at potential fraud by Fannie Mae, Freddie Mac and insurer American International Group Inc. A senior official said failed investment bank Lehman Brothers Holdings Inc. also is under investigation.
The inquiries will focus both on the financial institutions and the individuals who ran them.
Officials said the new inquiries bring to 26 the number of companies connected to the mortgage crisis under investigation over the past year.
With files from the Associated PressShare Tools
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