Fannie Mae off the hook with Justice Dept.

Investigation into accounting errors will result in restated earnings.
NEW YORK -- Fannie Mae, the largest provider of U.S. home funding, said Thursday the U.S. Justice Department has ended its probe into the company's accounting mistakes without filing charges, and the company's stock jumped on the news.
The investigation into the company's accounting errors began in October 2004. Fannie Mae reiterated that it expects to restate its earnings for 2001 through 2004 by the end of 2006.
Earlier this month, the company said its estimated $10.8 billion in accounting mistakes would be reduced because its mortgage investment losses were "significantly overstated."
Fannie Mae's (Charts) stock jumped in mid-morning trading on the New York Stock Exchange.
"The whole story with Fannie Mae now is progress, progress progress," said Ed Groshans, analyst at Fox-Pitt, Kelton. "The DOJ [Department of Justice] is closed, the SEC is closed, and OFHEO is pretty much closed. All the major institutions looking into Fannie Mae have pretty much closed their formal investigations."
In May, Fannie Mae agreed to pay a $400 million fine after a U.S. probe of its accounting scandal blamed management and the board for a corporate culture that spurred massive earnings manipulation.
That settlement was announced jointly by the Securities and Exchange Commission (SEC) and the Office of Federal Housing Enterprise Oversight (OFHEO), which oversees Fannie and its smaller counterpart Freddie Mac, after an audit noted "an arrogant and unethical corporate culture."
"We will continue to work closely and cooperatively with our regulators as we move forward to carry out the terms of our agreements, complete our restatement and build a better company," Fannie Mae chief executive Daniel Mudd said in a statement.
Fannie Mae and Freddie Mac are government-chartered firms charged by Congress to provide liquidity to the U.S. housing market. They do that by purchasing mortgages and repackaging them as securities for investors. The companies also hold mortgage assets in their own portfolios.
Freddie Mac has also been battling back to achieve timely financial reporting and improved controls after accounting woes led to an upward earnings restatement and management shake-up before Fannie's.
The massive size of Fannie's and Freddie's holdings, now a combined $1.4 trillion, has Congress hammering out legislation to create a stronger regulator with potentially more power over the types and size of the companies' investments.
Bush administration and Federal Reserve officials have said the huge concentrated holdings of Fannie and Freddie pose systemic financial risks.