WASHINGTON — Fannie Mae’s board of directors has agreed to oust chief executive and chairman Franklin Raines and chief financial officer and vice chairman Timothy Howard, a source familiar with the situation said Tuesday.
The announcement was expected to come Tuesday evening. The source said Fannie’s board would likely make Daniel H. Mudd, currently the company’s vice chairman and chief operating officer, the interim CEO until a permanent successor could be found.
Fannie was also expected to agree to change auditors. Currently, the company is audited by KPMG, which had signed off on Fannie’s previous accounting for its derivatives. The Securities and Exchange Commission said last week that the government-sponsored enterprise had not properly accounted for its derivatives and should restate its earnings since 2001. Fannie said it would do so and has estimated it will take a $9 billion loss as a result.
Mr. Raines’ fate at the company was all but sealed by the SEC announcement. At an Oct. 6 hearing he had defended Fannie’s accounting and said he would take responsibility if it was wrong. Mr. Howard is seen as the architect of Fannie’s financial statements.
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