Freddie Mac's CEO Steps Down Under Pressure from Federal Regulators
Parseghian Ousted for Involvment in Accounting Irregularities
By Kathleen Day
Washington Post Staff Writer
Friday, August 22, 2003; 5:39 PM
Freddie Mac chief executive Gregory J. Parseghian will step down, but will remain as the acting head of the mortgage-finance company until a permanent replacement can be found, sources said.
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After a meeting today, the company's board buckled under pressure from federal regulators and decided to replace Parseghian, who they picked two months ago. The board has begun a search for a permenent CEO, sources said.
Freddie Mac general counsel Maud Mater will also be replaced as soon as possible, sources said. Regulators at the Office of Federal Housing Enterprise Oversight and company officials agree that Mater failed in her duty to ensure the company properly disclosed accounting policies.
Improper accounting and disclosure contributed to bookkeeping errors that will force the company to restate earnings by as much as $4.5 billion for the last three years.
The errors led to a mangement shakeup in June, when the company's CEO, president and chief financial officer were forced out.
The board's decision to name Parseghian to replace the ousted Leland Brendsel was controversial, with some investors arguing his role in the accounting and disclousure fiasco should disqualify him from leading the company.
Regulators at OFHEO reached the same conclusion and told the board Wednesday that Parseghian must resign. It is unclear how much money Parseghian will receive as part of a severance package, but government and company sources say it's likely to be in the millions of dollars.
Last month the compay released an investigative report commissioned by the board that detailed the role Freddie Mac's top executives, including Parseghian, played in the accounting and disclosure errors.
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