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It might be getting a little boring to hear that Fannie Mae has once again failed to file its quarterly financial report to the Securities and Exchange Commission. This is the third straight quarter in which Fannie has filed a 12b-25 statement with the commission.

Fannie has failed to file quarterly reports for three successive quarters so it might be getting a little boring except that now there are rumblings that the New York Stock Exchange, on which Fannie has long been an active participant, is considering delisting the mortgage giant. If that should happen there could be other ramifications that would drastically affect Fannie and her stockholders.

To recap a little history, last summer Fannie Mae was accused of "smoothing" earnings; i.e. playing games with both income and expenses in such a way as to even out profits over time. There were allegations - as yet unsubstantiated - that this was done, in part, to trigger bonuses for high level executives. Two of those execs, CEO Franklin Raines and CFO Timothy Howard were "encouraged" to resign last December and the corporation's accounting firm, KPMG was fired.

Since Fannie Mae as well as its sister firm Freddie Mac (which earlier had similar accounting problems which it was able to fairly quickly clear) enjoy certain benefits from their status as Government Sponsored Enterprises (GSEs) this triggered a bunch of Congressional hearings and bills and the likelihood that both GSEs will soon come under much more strict government oversight. Both have already agreed to increase their capital requirements and reduce the huge portfolios of mortgages they hold.

Fannie has admitted that its earlier financial reports may have been off the mark by as much as $9 billion and has agreed to conduct a thorough financial review and restate its earnings back to 2001. It is that ongoing process which has caused it to miss its last three quarterly reports.

In a statement released on Tuesday, Daniel H. Mudd, President and Chief Executive Officer of Fannie Mae said that completing this restatement of earnings "is Fannie Mae's number-one corporate priority. To accomplish this, we have to obtain and validate market values for a large volume of transactions including all of our derivatives, commitments, and securities at multiple points in time over the restatement period. To illustrate the breadth of this undertaking, we estimate we will need to record over one million lines of journal entries, determine hundreds of thousands of commitment prices and securities values, and verify some 20,000 derivative prices."

Mr. Mudd said that he expects that 30 percent of the company's employees will spend over half their time on the restatement this year and that some 1,500 consultants will be on board by year's end to help with the project. The company is also investing over $100 million in technology to enhance or create new accounting and reporting systems.

While many television financial analysts said that they doubted that Fannie would be de-listed by the New York Stock Exchange, such an action would have serious consequences for the corporation and its stockholders. Over the counter stocks lack the visibility of NYSE traded stocks and some large traders are prohibited by their own rules from investing in over-the-counter securities. The consensus of the pundits seemed to be that Fannie Mae would quickly find a new home on the NASDAQ if the NYSE pulls the plug.

According to Reuters News Agency, Banc of America analyst Robert Lacoursiere on Wednesday reaffirmed his earlier sell recommendation for Fannie Mae stock citing an uncertain regulatory outlook and what he called the "unsustainability of the company's investment portfolio."

Mr. Mudd said in his statement that Fannie is "engaged in regular discussions with the staff of the New York Stock Exchange regarding the status of our restatement and continued listing through completion of the restatement."