FBI investigates Freddie Mac losses

Nearly $3.7 billion in losses still to be recognized in Freddie Mac's quarterly earnings statements may soon face FBI scrutiny. The FBI is looking into possible accounting violations at Freddie Mac resulting in the delay of reporting billions of dollars in losses from derivative interest-rate swaps, according to a report in the Wall Street Journal today.

The Journal quotes from a February 2008 confidential report by the investigative firm Kroll that concluded "inappropriate application" of accounting rules "enabled Freddie to defer billions of dollars of losses incurred from 2001 to 2004" on derivative contracts whose value depends on fluctuations in interest rates. FBI investigators obtained a copy of that report, which has not yet been released publicly, and is currently seeking additional information.