Fannie Mae-No Politics (FNMA)

[Wise Man]

Timothy Howard should be ashamed for having repurchased $7.4B of $FNMA.
FIRST.
It's recorded on the balance sheet as Treasury Stock, a contra-equity account.
It reduces the common stock par value when calculating the core capital.
This reduction of the core capital was one of the reasons of the Conservatorships for Critically Undercapitalized enterprises. (Freddie Mac too)
We have to wonder if this is another reason why the Capital metrics are calculated "upside down", that is, beginning with the Net Worth and subtracting the SPS, instead of the sum of its components, where we would see what I've mentioned of Treasury Stock reducing the Core Capital, and people would begin to wonder who is the crackpot that repurchased common stocks in the market, in congressionally-chartered private corporations. Clearly, this isn't part of its Public Mission.


SECOND
He also aimed to boost his EPS Target Bonus, (buybacks aren't recorded in the shares outstanding to calculate the EPS).
Additionally, accounting fraud to boost his EPS Target Bonus was the reason why he was abruptly expelled from Fannie Mae in 2006, the company had to restate the financial statements of the prior years and pay a $400 million fine, as stated in the 300-page report by the OFHEO and also the SEC, portraying him as the sole boss of a corrupt organization and sole responsible of the lack of controls.
This is a fact. Other theme is that, in 2012, he was acquitted of all charges by a DC court, due to lack of evidence that he had the intent to commit fraud. And we wonder why on earth do we have Federal Agencies with enforcement action if later a low profile judge sets everything aside, and we don't know if there was a Fanniegate deal with the DOJ behind.