Fannie Mae Ethical Statement

Fannie Mae’s Decline in Ethical Appearance To increase the housing market in 1938 the federal government created Fannie Mae, however in 1968 the government stopped funding the program and it was taken over by shareholders. The companies overall mission were to expand homeownership and make it a success for families. Fannie Mae was know for taking chance on home loans that would be considered “risky”, they allowed those with poor or no credit, and low income to be able to get a loan to purchase a house. In the early 2000’s the company received many of awards for its business ethics and its corporate citizenship. The outsiders looking in on Fannie Mae had seen nothing but a company that looked out for citizens of the United States by making

Within this list they also were rated by Standard & Poor’s on its corporate governance scoring system as a 9, with 10 being the highest. From looking at the outside appearance of Fannie Mae this evaluation seems pretty fair and well discovered. But, the problem with outside evaluations is that there is more behind closed doors that are not being seen. In order to fully evaluate a company based on governance and ethics they must be assessed by what happen inside the business as well. Fannie Mae is a perfect example of this; from the outside you would assume that they fallow outstanding ethical behavior due to their mission to help others. But when looking at the financial information of the business you would find executives that are manipulating numbers to raise Fannie Mae’s earnings per share so they can receive large bounces. Some may consider this poor ethics, but from my viewpoint I would consider it poor ethics as well as poor social responsibility. Social responsibility is when an individual or organization looks out for the benefit of the society as a whole. Fannie Mae’s executives where not performing socially responsible when being dishonest on their accounting as well their lax internal controls. In general Fannie Mae had great attentions to increase the homeownership market, but the “me-first mangers” created a poor image for the

The first sign was in November of 2003 when Roger Barnes, an employee in the controllers’ office quite his job do to his frustration with the auditing office at Fannie Mae. Barnes had mentioned a concern of his regarding the companies accounting police and rather then investigating the issue, the internal audit just ignored his concerns. Throughout the year of 2003 the Fannie Mae CEO, Daniel Mudd received many of concern regrinding the businesses financial information, bur rather then doing anything about them he pushed the concerns under the rug and kept on like everything was fine. Also in the New York Attorney General Eliot Spitzer’s also brought up a red flag when he discovered the finite-risk policy Fannie Mae bought and listed it as an insurance policy rather then a loan. Overall, the company smoothed over all the problems by keeping the true numbers of the business