The biggest mortgage firm in the world has some news out this morning. "Fannie Mae, the nation's top home mortgage lender, said Monday that it notified the Securities and Exchange Commission that it will miss the March 16 deadline to file its 2005 annual report. The lender said it expects that its annual report, which will include its restated results for 2004, won't be submitted before the second half of the year."

"Mortgage finance giant Fannie Mae, engulfed in an $11 billion accounting scandal, on Monday said it found more accounting errors and delayed posting financial results for the second year running."

"Fannie Mae did not estimate how the newly disclosed errors might affect the magnitude of its expected restatement. Fannie disclosed new accounting problems in its Monday filing with the SEC. It said those errors were not previously reported in other filings or in the report issued last month by former U.S. Sen. Warren Rudman, the investigator hired by the company's board."

"Those new errors included accounting for certain investment securities at the incorrect cost basis, accounting for certain guaranty fees and obligations in connection with a small portion of Fannie Mae mortgage backed securities trusts, and certain loan-related accounting matters."

"The U.S. Treasury Department is studying the growth of sophisticated financial vehicles such as hedge funds and derivatives to see what risks they may pose to financial markets or institutions, a senior official said on Monday."

"Treasury Undersecretary for Domestic Finance Randal Quarles told an international banking conference that derivatives have exploded in both type and use, and sounded a note of caution. 'We at Treasury,' he said, 'want to ensure that the magnitude of risk and exposure are properly measured and that investors and market participants have full and adequate disclosure' with which to make decisions."

"Quarles said Treasury is also reviewing the pace of capital accumulation by hedge funds and private-equity funds, the role of nonbank financial institutions in markets and other issues. He also criticized the big holdings of securities at mortgage giants Freddie Mac and Fannie Mae."

"Quarles said 'we'd like to see these holdings significantly reduced. With an appropriate phase-in period, we believe that our capital markets could adjust to a significant reduction in the presence of the [government-sponsored enterprises] as mortgage investors,' he said."