December 7, 2006
Not a Good Day
American business did not have a good day. Fannie Mae announced that it has to restate its financials, reducing earnings by a whopping $6.3 billion to correct for several years of cooking the books. Stockholder equity increased by $4.1 billion, however. It took Fannie Mae $1.5 billion in fees to over 3,000 consultants to figure out what its numbers should have been. Home Depot announced the results of an internal investigation that revealed it had routinely back dated options over a 19 year period and at all levels of the company. Employees were added or subtracted to the option plans without formal authorization. Compensation was understated by over $200 million. There was "no evidence of intentional wrongdoing by the company managers or its board," however. Huh? This is the company that also awarded unearned bonuses to its CEO, Robert Nardelli.
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