Jesse at Jesse's Cafe Americain, 7 September 2008, translates Henry Paulson's "newspeak" into English at http://jessescrossroadscafe.blogspot.com/2008/09/text-of-paulsons-statement-on-freddie-html. Thank you Jessee.
Francine McKenna has some choice words about F&F at her Re: The Auditors, 8 September 2008. Here's a link: http://www.retheauditors.com/2008/09/fannie-mae-freddie-mac-takeover-now.html.
"The government's planned takeover of [F&F], ... came together after advisers pouring over the companies' books for the Treasury Department concluded that Freddie's accounting methods had overstated its capital cushion, according to regulatory officials briefed on the matter. ... Then, last week, advisers from Morgan Stanley hired by the Treasury Department to scrutinize the companies came to a troubling conclusion: Freddie Mac's capital postion was worse than initially imagined, according to people briefed on those findings. The company had made decisions that, while not necessarily in violation of accounting rules, had the effect of overstating the companies' capital resources and financial stability", my emphasis, Gretchen Morgenstern and Charles Duhigg at the NYT, 7 September 1008.
I'll add a few things. According to each's proxy statement, Fannie, Freddie and Morgan Stanley (MS) paid Deloitte & Touche (D&T), PriceWaterhouse (PW) and D&T: $49, $73 and $47 million in audit fees last year. Amazing. What did D&T and PW do for that money, assuming MS is correct and F&F still have accounting problems? What does the SEC do? What do those useless idiots, pardon me, upstanding public servants at the PCAOB do? How can this continue? Hey Mark Olson (MO), why don't you beat up ten 97-pound weakling CPA firms to show us how macho your PCAOB is? Do you push 80-year old, 5' 2" 110-pound ladies to the ground when you're feeling "bad" MO? Yeah, you MO. Try that with Sara Palin and see what happens. She'll probably fill you with lead. Will MS fire D&T for failing to detect accounting problems at FNM? Or will MS recommend FNM keep D&T as D&T's "failure to find the problems" shows D&T will "play ball" when told? Stay tuned for the continuing soap opera.