SEC Charges Ex-Fannie, Freddie CEOs With Fraud

About time.

WASHINGTON — The Securities and Exchange Commission has brought civil fraud charges against six former top executives at Fannie Mae and Freddie Mac, saying they misled the government and taxpayers about risky subprime mortgages the mortgage giants held during the housing bust.

Those charged include the agencies’ two former CEOs, Fannie’s Daniel Mudd and Freddie’s Richard Syron. They are the highest-profile individuals to be charged in connection with the 2008 financial crisis.

Mudd, 53, and Syron, 68, led the mortgage giants when the housing bubble burst in late 2006 and 2007. The four other top executives also worked for the companies during that time.

The case was filed in federal court in New York City.

In a statement released through his attorney, Mudd said the lawsuit “should never have been brought” and said the government reviewed and approved all of the company’s financial disclosures.

The case has been made that the government was actually responsible for the mortgage market crash, not Wall Street. I posted about it here.

In a business, the guilty would be strung up. If this was a “Republican” scandal, those involved would be hounded until they were either in prison or like Ken Lay of ENRON (of which the NYT’s Paul Krugman was an adviser), died before he could serve time.

I would like to think that the government investigators have enough credibility and ethics to go all the way to the root on this one but with Eric Holder only interested in creating opportunities for voter fraud, suing our own States for trying to do the jobs that the American government won’t do and ripping our borders wide open, my faith is – how shall we say – diminished…

You don’t hear anything but crickets chirping (except on FOX) because this is a Barney Frank and Chris Dodd scandal…a Democrat scandal.

Think this may be the reason that Barney Frank decided to retire?

One thought on “SEC Charges Ex-Fannie, Freddie CEOs With Fraud

  1. “The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law that requires banks and savings and loan associations to offer credit throughout their entire market area and prohibits them from targeting only wealthier neighborhoods with their services, a practice known as ‘”redlining.”
    “In 1995, as a result of interest from President Bill Clinton’s administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators’ attention on institutions’ performance in helping to meet community credit needs.
    These revisions with an effective starting date of January 31, 1995 were credited with substantially increasing the number and aggregate amount of loans to small businesses and to low- and moderate-income borrowers for home loans.”The revisions allowed the securitization of CRA loans containing subprime mortgages. The first public securitization of CRA loans started in 1997 by Bear Stearns. The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent.
    Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks. By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market.

    You simply cannot loan large sums of money (housing loans) to people who cannot afford to pay it back.

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