Fannie Mae acknowledged that it would not complete what could amount to a $11 billion restatement until the second half of 2006. As a result, the company conceded, it would be breaching the New York Stock Exchange’s listing standards.

The mortgage giant “is engaged in regular discussions with the staff of the New York Stock Exchange regarding the status of our restatement and [its] continued listing,” said president and chief executive officer Daniel H. Mudd, in a statement.

Fannie Mae hasn’t filed a quarterly report with the Securities and Exchange Commission since August 9, 2004. Last December it was ordered by the SEC to restate its financials from 2001 through mid-2004, reducing the company’s earnings by about $9 billion.

In order to even meet its self-imposed deadline for completing the restatement, Mudd said that more than 30 percent of his employees will spend over half their time putting together the restatements, “and many more are involved.” In addition, the company plans to hire about 1,500 consultants by year’s end to help with the restatement.

Mudd also said he has “significantly increased” the size of Fannie Mae’s controllers department; “We are leaving no stone unturned,” he asserted.

To further illustrate the breadth of the undertaking, Mudd estimated that the company will need to record more than 1 million lines of journal entries, determine hundreds of thousands of commitment prices, and securities values, and verify some 20,000 derivative prices. “Altogether, we project devoting 6 [million] to 8 million labor-hours to the restatement,” he added.

Fannie Mae is also investing more than $100 million in technology projects “to enhance or create new systems related to accounting and reporting,” Mudd noted.

In related news, on Thursday Moody’s Investors Service affirmed Fannie Mae’s AAA senior debt ratings in the face of the company’s announcement regarding the timing of its restatement. “Despite this serious setback, Fannie Mae’s status as a leading participant in the U.S. housing finance market, its GSE status, and its effective management of credit and interest rate risks are not changed, and provide support for the firm’s senior unsecured and bank financial strength ratings,” Moody’s stated in a press release.

And in a conference call with investors, Mudd said that Fannie Mae is close to filling the positions of chief financial officer and chief risk officer, according to Reuters.

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