Probe of Fannie Mae in new direction

Federal regulators’ investigation of Fannie Mae’s accounting has taken a new avenue as they examine whether the mortgage giant failed to properly account for thousands of trusts it created whose assets are kept off its balance sheet.

Fannie Mae shares dropped $1.78, or 3.3 percent, to close at $51.46 in Monday trading on the New York Stock Exchange — below their previous 52-week closing low of $53.20. Its shares are down by more than a third since September.

Fannie Mae uses the trusts to issue securities backed by the billions of dollars of home mortgages annually that it buys from lenders and bundles together for resale to investors worldwide.

The government-sponsored company, which is the largest U.S. buyer and guarantor of home mortgages, recently was ordered by the Securities and Exchange Commission to restate its earnings back to 2001, a correction that could reach an estimated $11 billion. Another federal agency, the Office of Federal Housing Enterprise Oversight, also has been investigating Fannie Mae’s accounting since last year and found that the company violated rules related to derivatives, financial instruments that it uses to hedge against swings in interest rates.

Annual survey again ranks JetBlue service best

JetBlue was once again ranked as offering the best service in an annual survey that also found five of the top six airlines are low-fare carriers.

AirTran Airways, Southwest Airlines Inc. and UAL Corp.’s United rounded out the top of the national Airline Quality Rating study, released Monday. Jet Blue is part of JetBlue Airways Corp.

“JetBlue probably has the right mix of services and management to maintain and secure this top position,” said Brent Bowen, a co-author of the report and director of the University of Nebraska’s aviation institute. The study is based on Transportation Department statistics.

Civil resolution of AIG probe said possible

The new chief executive of American International Group Inc. says he is cooperating fully with regulators, who are looking into widespread accounting irregularities, and the New York attorney general said he thinks a “civil resolution” of the probe is possible.

The statement from Attorney General Eliot Spitzer that a resolution could be reached without criminal charges sent the huge insurance company’s shares up $2.35, or 4.6 percent, to close at $53.30 in Monday trading on the New York Stock Exchange, putting more distance from their recent 52-week low of $50.16.

In a letter to shareholders released late Sunday night, CEO Martin J. Sullivan said management was working “to ensure that everyone throughout the organization complies with AIG’s policy of full cooperation with all investigative efforts, both internal and external.”

Will meet most EU demands, Microsoft says

Microsoft Corp. says it will meet most demands by European Union regulators on making software blueprints available to competitors, including lowering licensing fees, but is seeking further talks on some issues.

Microsoft said it delivered a letter to EU regulators on Monday detailing its intentions.

EU spokesman Jonathan Todd said Monday afternoon that he could not yet confirm that the commission received Microsoft’s latest letter, but said “We have received a letter in response” to our questions that Microsoft sent before Easter.

He said the EU was “studying it carefully.” He gave no further comment on the content of Microsoft’s letter or on Monday’s announcement.