Freddie Mac Faces Hearings in Congress

Congressional critics of Freddie Mac said Tuesday that they would hold hearings on the home mortgage financier that ousted its top management Monday over an earnings restatement going back to 2000.

Meanwhile, the Securities and Exchange Commission was investigating whether Freddie Mac has violated securities laws, a person close to the matter said.

Rep. Richard H. Baker (R-La.), a persistent critic of Freddie Mac and sister mortgage financier Fannie Mae, said he planned one or more hearings into the accounting woes and whether regulatory oversight of the two shareholder-owned companies should be tightened.

Freddie Mac, which manages a $1.29-trillion portfolio of home loans, ousted its three top managers over allegations that President and Chief Operating Officer David Glenn failed to cooperate fully with a review of earnings statements from 2000 through 2002. It also replaced Chairman and Chief Executive Leland C. Brendsel and Chief Financial Officer Vaughn Clarke.

The managers could not be reached for comment.

Fresh calls for reform probably won’t lead to real change unless more members of Congress become disenchanted with the mortgage enterprises, analysts said. That appeared unlikely in an economy in which housing is among the few thriving industries.

Freddie Mac and Fannie Mae, called government-sponsored enterprises because of their congressional charter to expand homeownership, have been under fire from critics worried about the risks they could pose to the financial system.

Baker said hearings on Freddie Mac’s woes and on its regulatory oversight, now by the Office of Federal Housing Enterprise Oversight, would be held later.