THE senior management team of the second largest mortgage company in America was ousted after its president’s attempts to tamper with evidence to an inquiry into the way the mortgage company compiles its accounts was exposed, it emerged yesterday.

David Glenn, president and chief operating officer of the Federal Home Loan Mortgage Corporation (Freddie Mac) was dismissed. Leland Brendsel, the chairman and chief executive, and Vaughn Clarke, the chief financial officer, also left the company.

The scandal could prove embarrassing to Gordon Brown, the Chancellor, who extolled the virtues of the American method of guaranteeing long-term fixed mortgage rates yesterday in a speech to Parliament on Britain’s readiness to join the single currency. Mr Brown has ordered an inquiry into ways in which the UK could adopt the model.

The dismissal and resignations cast a pall over the $3,300 billion (£2,000 billion) market for US mortgage guarantees, which is controlled by Freddie Mac and its close competitor, Fannie Mae.

Treasury bond yields plunged to near 45-year lows and the dollar weakened as investors shunned the mortgage market. Shares in the big mortgage lenders also fell to record lows.

Fannie Mae and Freddie Mac are private companies but have close ties to the US Government, which set up the organisations.

The announcement, made before the market opened in New York yesterday, also prompted a further regulatory investigation into the way Freddie Mac is run.

The company, which was set up in 1970 and privatised in 1989, is under investigation for failing to report accurate accounts from 2000 to 2002.

Freddie Mac was set to reveal the results of the inquiry into its accounts by the end of this month.

But the company gave warning yesterday that the report might not be completed before September.

Mr Glenn was sacked at the end of last week after a private diary he was asked to hand over to investigators was discovered to have been tampered with. He is said to have admitted altering certain entries in the journal and tearing out some pages.

Mr Glenn was sacked “because of serious questions as to the timeliness and completeness of his co-operation and candour with the board’s audit committee counsel”, the company said.

The admission prompted the regulator that oversees Freddie Mac to write to the company suggesting that dismissing Mr Glenn and the other personnel changes might not be enough to solve its problems. “Concerns surrounding management practices and controls remain . . . additional actions must be taken to address these matters,” Armando Falcon, of the Office of Federal Housing Enterprise Oversight, said. Freddie Mac shares were down more than 16 per cent at $50.18 at midday yesterday.