[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]
|
Status: Not Logged In; Sign In
United States News Title: Fannie Mae and Freddie Mac Executives Sued By SEC Fannie Mae and Freddie Mac Executives Sued By SEC Now they’ll be Government SUED Entities. by John Hayward The Securities and Exchange Commission is suing six top executives of Fannie Mae and Freddie Mac for lying to the public about their subprime mortgage exposure and misleading investors. Among those named in the suit are former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron. The Wall Street Journal has details of the SEC announcement: "Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," said Robert Khuzami, director of the SEC's Enforcement Division. "These material misstatements occurred during a time of acute investor interest in financial institutions' exposure to subprime loans, and misled the market about the amount of risk on the company's books. All individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country's investors." The SEC alleged that the Fannie Mae executives misled the public about the government-sponsored firm's exposure to subprime mortgages and so-called Alt-A loans between December 2006 and August 2008. Freddie Mac executives allegedly did the same regarding its exposure to subprime loans between March 2007 and August 2008. These “material misstatements” contained a whole lot of material. Fannie Mae, for example, reported $4.8 billion of subprime single-family loan exposure in 2006, but failed to include another $43 billion in shaky loans for borrowers with “weaker credit histories.” Freddie Mac CEO Syron claimed his Government-Sponsored Entity had “basically no subprime exposure,” when it turned out they had about $141 billion at the time, and it eventually grew to $244 billion. Fannie and Freddie have promised to “accept responsibility” and cooperate with the SEC litigation to avoid fines and civil prosecution. However, while Syron has been quiet so far, ex-Fannie Mae CEO Mudd is not taking these lawsuits lying down, according to Bloomberg News: Mudd, now CEO of Fortress Investment Group LLC (FIG), was ousted when Fannie Mae and Freddie Mac were seized by regulators in September 2008. In a statement, he said the federal government and investors were aware of “every piece of material data about loans held by Fannie Mae.” “The government reviewed and approved the company’s disclosures during my tenure, and through the present,” Mudd said today in the statement. “Now it appears that the government has negotiated a deal to hold the government, and government-appointed executives who have signed the same disclosures since my departure, blameless -- so that it can sue individuals it fired years ago.” (Emphasis mine.) Another target of the lawsuits, ex-Fannie Mae executive vice president Thomas Lund, dispatched an attorney to say he “did not mislead anyone,” but instead, “during a period of unprecedented disruption in the housing market, nobody worked more diligently or honestly to serve the best interests of both investors and the government.”
Post Comment Private Reply Ignore Thread |
|
[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]
|