Watchdog orders Freddie Mac chief to go

[coda]

Watchdog orders Freddie Mac chief to go
By David Wells in New York

Published: August 23 2003 5:00 | Last Updated: August 23 2003 5:00

The board of Freddie Mac, the second-largest source of US mortgage financing, yesterday said it would replace its chief executive Greg Parseghian on orders from its government regulator.

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We want to thank Greg Parseghian for his outstanding contributions to this company, first as chief investment officer and most recently as chief executive," said Shaun O'Malley, Freddie Mac chairman. "But after discussions with our regulator and Greg we believe it is in the interest of the company to accede to OFHEO's directive."


Freddie Mac has stood by Mr Parseghian since naming him chief executive in June after ousting the chairman Leland Brendsel, president David Glenn and chief financial officer Vaughn Clark. Their removal followed the revelation of an accounting scandal involving an understatement of earnings by as much as $4.5bn over three years.


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Mr Parseghian - who had run the company's most profitable division - was asked to help the company recover from the scandal. But an investigation commissioned by Freddie Mac and released last month showed that Mr Parseghian was also one of the management figures who had actively helped the company smooth fluctuations in earnings, resulting in the understatement of profits.




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