SEC charges former Fannie and Freddie execs
On Friday, the Securities and Exchange Commission brought civil fraud charges against six former executives of Fannie Mae and Freddie Mac. The complaint charges that the executives knowingly misled the public concerning the extent of subprime and Alt-A (a step above subprime) mortgages that they held.
In one case,
Freddie told investors in 2006 that it held between $2 billion and $6 billion of subprime mortgages on its books. The SEC says its holdings were actually closer to $141 billion, or 10 percent of its portfolio in 2006, and $244 billion, or 14 percent, by 2008.
Because this is a civil, not criminal case, those charged face only civil penalties, “disgourgement of ill gotten gains”, and prohibitions from serving on boards or as executives of publicly traded companies.
You are probably wondering why criminal charges were not brought, ala Enron. The answer is simple…perhaps.
Even proving a civil fraud,
…could be complicated by the fact that there weren’t widely accepted definitions about what constituted a subprime or so-called Alt-A mortgage…they seem to turn on whether Fannie and Freddie should have included broader definitions of those loans…
Amazing…the taxpayers have had to fork over $151 billion (and still counting) to bail out Fannie and Freddie, and investors lost countless of millions because there is no simple definition of “subprime”. By whatever name you give them, certainly these executives knew their companies took on thousands of mortgages from borrowers who had little or no chance of ever repaying them. They knew that many borrowers had put little if anything down when buying the home. They knew that many borrowers had very poor credit ratings.
In my humble opinion, failure to disclose that, regardless of the specific word used to describe the situation, rises to the level of criminal fraud.
Or, is this yet another attempt by the federal government to absolve the federal government of any responsibility for the financial chaos that is still being felt?
What about Frank & Dodd?? They were certainly complicit in allowing this to continue even after President Bush & republicans showed concern for what could (and did) happen.? The democrats laughed uproariously at President Bush but the economy killing irony does not escape those of us with brains in our heads.
Yes, I agree. I watched those videos and saw Chris Shays tell Franks and committee exactly what was going on. He was abused and the committee was obnoxious. Just a question was Frank Raines charged with anything? Or is he excused for bringing an apple (Not to be confused with an APPLE) to President Obama?
No charges were filed against Mr. Raines.
How about Jamie Gorelick?? Probably not.
Sorry, Dims, no charges against Gorelick either.
I immorality of situational ethics comes to fruition, no definition of impropriety, no punishment for malfeasance, no remorse by perpetrators, and inquiries by the complicit.? Good grief, what will the future bring?
More of the same, unless we sweep out the old in 2012
Even swept out, these ethically challenged peoplewill face NO consequences for their actions. Not even a fine! All that will happen is they will “retire” (with millions from Fannie and Freddie) for a while, and possibly resurface in a private sector company with a fat salary, compensation package, percs, etc.
And, yes, SOS, WE will be stuck holding the bag for $175+ Billion. (It’ll be that by tomorrow.) And there’s not a thing that WE can do about it.
Darn bag is getting H-E-A-V-Y!
That’s what Santa said. 😉
The CEO’s & Angelo & their friends probably violated no laws-these people are smart,but the people need to hear & see what these guys did. So we can all rise as one & demand DEATH for Fanny & Freddy.
Sarbanes Oxley? Let me guess, this does not qualify for Freddie and Fannie because they are quasi government.? How is this not accounting fraud?? Is legislation written so poorly that we need yet another bill (Dodd-Frank) so that we can really make sure that people like this can be ciminally prosecuted?? Who was the accounting firm overseeing the auditing of this firm?? It is all a joke and bills should be limited to 10,000 characters or 12-15 pages that every person can read and understand.