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The Fannie Pack

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Where there's smoke...

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I'm jumping into a lunch meeting but I wanted to quickly point out the Fannie Mae (FNM:NYSE) news to those Minyans who aren't on the Buzz. Bloomberg is reporting that a federal regulator, in a statement, warned that Fannie may have used improper procedures in accounting for impairments.

Bloomberg further quotes the director of the Office of Federal Housing Enterprise Oversight (OFHEO) as saying "our review of this particular matter, while not concluded, has led to concerns that Fannie Mae may not have applied the proper accounting guidance in this area. This could affect not only the company's manufactured housing portfolio but other assets as well."

I've been sniffin' smoke in this sucka for a long time--and it's been a long haul--but I feel compelled to keep you up on what I see and feel in the name. Why? The implications are massive--far bigger than Worldcom, Enron, Adelphia and Tyco combined--as an unwind, if and when, will ripple through asset classes like a Tsunami. THE question--and it really boils down to this--is whether the government will let it play out.

And as always, Minyans, I offer this with educational intent only. This is the biggest blip on my trading ship, however, and I needed to make sure it's on yours as well.



R.P.
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