Fannie Mae

Fannie Mae was created in 1938 during Roosevelt administration to increase affordable housing and to draw investment toward the housing market (Jennings, 2012, p.121). It was initially federal funded, but it was redirected to shareholder ownership in order to obtain capital from the private market. Fannie Mae was one of the most ethical organizations in the United States. Today, according to Fannie Mae website,  “Fannie Mae is supporting today's economic recovery and helping to build a sustainable housing finance system. We exist to provide reliable, large-scale access to affordable mortgage credit in  all communities across the country at all times so people can buy, refinance, or rent homes” (Fannie Mae, 2015,para.1).

Based on my reading, I cannot consider Fannie Mae honest company even thought it was recognized as a good corporate citizen because there were undetected issues that went on for nearly a decade (Jennings, 2012, p.123). Although, they achieved double digit growth in earnings, portfolio grew five times, total profit 24 billion; they used a questionable discretion in determining the accounting treatment of buying and selling mortgage assets.  By doing that it gave executives a way to smooth earning grow and gave them generous pay.

Fannie Mae was only looking to make a profit without thinking about the impact they may have on the community with faulty mortgages. They knew that people never had a mortgage before; still they gave them mortgage. Honest company would not allow its customers to max out and would go the extra mile to help customers. Most of those borrowers did not know what they are signing. Risky borrowers are very easy target. Fannie Mae let the stakeholders down by not practicing ethical behavior.  Moreover, those in charge were not held accountable for the devastation that they caused. I could agree that Government policy makers failed to see potential risk with the financing, but the manner in which the industry leaders prevented their liability is hard to overlook. They played system and won, and they ones that stayed behind were American honest people with good credit scores.

                                                            References

Fannie Mae. (2015). Who is Fannie Mae today? Retrieved March 10, 2015 from http://www.fanniemae.com/portal/about-us/company-overview/about-fm.html

Jennings, M. (2012). Business ethics: Case studies and selected readings. 7th ed. Mason, OH South-Western Cengage Learning.