NEW YORK – Fannie Mae (FNM), the troubled mortgage giant, said Wednesday it may sell up to $4 billion in preferred stock as soon as this week.
The announcement of a possible stock sale, which would be to qualified institutional buyers only, comes after the Office of Federal Housing Enterprise Oversight (search), or OFHEO, said last week that the company has fallen below its minimum capital requirement as of Sept. 30.
Last week, Fannie Mae ousted former chief executive officer Franklin D. Raines (search) and former chief financial officer Timothy Howard after the Securities and Exchange Commission (search) staff found Fannie had violated accounting rules and would have to restate results for the past four years.
The executives were forced out Dec. 21 by Fannie Mae's board of directors. OFHEO — the company's chief regulator — pressured the board to act after the SEC said the company must make accounting corrections that could erase $9 billion of past profit dating to 2001.
Fannie Mae officials weren't immediately available for comment.
The company said it is considering selling one series of preferred shares that would be convertible by holders into shares of the company's common stock at a premium to the closing price of common stock.
The other series would be a non-convertible floating rate preferred stock.