Question: EXPLORING THE INTERNET

At the time of this text's publication, the U.S. economy was experiencing a financial crisis. Obtaining business loans, home and automobile loans, and consumer credit was more difficult because of tightening of credit policies by major lenders. Stock prices were declining and people were worried. At the heart of the problem were two large home mortgage lenders-Fannie Mae and Freddie Mac- that provide funds to home mortgage lenders by either purchasing mortgage assets or issuing home mortgage loan guarantees that facilitate the flow of funds into the home mortgage market in the United States. Both firms have also been accused of doctoring earnings and questionable accounting practices.

Assignment: 1. Using an Internet search engine such as Google or Yahoo!, locate two or three sites providing information about the recent accounting scandals at these two firms.

2. After examining these sites and reading journal articles, report information about the accounting scandals for each firm. What type of questionable accounting practices occurred in these firms?

3. Based on your assessment of the information you have read, what were the consequences of the questionable accounting practices that occurred?

4. In a two-page report, summarize the questionable accounting practices and what the consequences were for each firm and the executives involved in the scandal.