Freddie Mac Ethics

1115 Words3 Pages

Freddie Mac is in the home mortgage business. It is their jobs to help low income families find affordable housing. Freddie Mac has been in business since 1970. They were created in order to get more American families in to their own homes. Their mission statement says, “Our statutory mission is to provide liquidity, stability and affordability to the U.S. housing market” (FreddieMac.com, 2014). Despite this honorable mission statement, Freddie Mac was involved in a case of accounting fraud that went on from 1998 to 2002. The lack of ethics at this company started with top brass setting the tone, and the rest of the company following suit.
Rather than being sticklers for following GAAP accounting principles and internal controls, this company took unethical behavior to a whole new level. They lied when the truth would have been easier to tell. It is almost as if they had no comprehension that the meaning of the word ethics is “the principles of conduct governing an individual or a group (professional ethics); the discipline dealing with what is good and bad and with moral duty and obligation”, (Mirriam-Webster, 2011). To be ethical all one has to do is follow laws, rules, regulations and your own internal moral compass, all things this company seemed to know nothing about.
Freddie Mac was accused of either lying or misrepresenting the facts in order to make the amount of risk they were taking appear smaller. Investigators believed that this was done in order to comfort investors. The mortgages they were talking about, the ones that were considered risky were sub-prime loans, and they were prone to failure. A lot of these people should never have been given loans with interest rates that high. It was the job of Freddie Mac to hel...

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...he Special Examination of Freddie Mac. OFHEO.
(2003). Report of the Special Examination of Freddie Mac.
The Associated Press. (2007). Freddie Mac pays $50M to settle fraud charges. Washington: USA TODAY.
REFERENCES:
http://www.freddiemac.com/corporate/company_profile/

http://abcnews.go.com/Business/story?id=3664473

http://abcnews.go.com/WNT/video/fannie-mae-freddie-mac-execs-accused-fraud-15175308

http://www.nbcnews.com/id/21027918/ns/business-us_business/t/freddie-mac-settles-accounting-fraud-charges/#.UyyxlvldWyU

http://www.foxbusiness.com/2011/12/16/fannie-freddie-former-execs-could-lose-bubble-era-pay/

http://www.foxbusiness.com/topics/business/finance/CEOs/richard-syron.htm

http://www.ncpa.org/sub/dpd/index.php?Article_ID=5028 http://www.freddiemac.com/investors/infostat/pdf/supplement_082503.pdf http://www.huduser.org/publications/pdf/gse.pdf

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