Sallie Mae's larger sister company, Fannie Mae, is embroiled in its own corporate scandal.
Fannie Mae's Chief Executive Officer Franklin Raines and Chief Financial Officer Timothy Howard were forced out of the company last month after financial irregularities were revealed.
The Securities and Exchange Commission found that the government-sponsored company violated accounting rules and manipulated accounting estimates. The report said Fannie Mae delayed booking $200 million of expenses in 1998, allowing Raines and other top executives to receive millions of dollars in bonuses.
Fannie Mae is the biggest buyer and guarantor of home mortgage loans in the United States.
The reinstitution of earnings has the potential to create a net loss of $9 billion and erase 1/3 of the company's profits since 2001.
In addition to the SEC investigation, the Justice Department is pursuing a criminal probe into the company's accounting.
-- Sarah Breger
