Skip to comments.What A Racket (Fannie/Freddie Legal Bills)
Posted on 01/24/2011 9:41:19 AM PST by FromLori
It's common for companies to indemnify their officers and directors against lawsuits. But what happens when the company gets taken over by the government? Oh, you know....
Since the government took over Fannie Mae and Freddie Mac, taxpayers have spent more than $160 million defending the mortgage finance companies and their former top executives in civil lawsuits accusing them of fraud. The cost was a closely guarded secret until last week, when the companies and their regulator produced an accounting at the request of Congress.
This would be amusing if it wasn't so outrageous. Remember, most of these allegations date back to the early part of the decade, when Fannie and Freddie got caught cooking the books. That in turn led to a lot of litigation, much of it aimed at the officers and directors.
Of course when the government took over the companies, having utterly failed to address the problem back in the early part of the decade, they got the continuing bills as well.
Or rather, we did.
One of the things I feel very strongly about is we need to be doing everything we can to minimize any further exposure to the taxpayers associated with these companies, Mr. Neugebauer said in an interview last week.
How are you going to do that, other than cutting off these firms from the public teat?
Yes, that's what you should do - even though doing so would potentially expose the holders of their MBS to losses. That, too, we should do - after all, the black-letter of their prospectus' have said since the beginning that there was NO government guarantee.
Got Political Will?
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You are still bailing out the Banks and paying to defend them at the same time because of all their fraud in selling these products to investors as AAA MBS’s!
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This starts with a lie.. Fannie and Freddie have always been federal government controlled and operated... ALWAYS..
What a great country! Eh?
Well,it started as a government operation in the first place
(Jimmy Carter ?) made to stand alone and then returned to mama, full cirkle I’would call it, so what did you expect?
Here is an update to the FED rule change from Mish:
” Unless these securities can be sold back out into private hands for the same value that was paid to acquire them, the Fed will have effectively forced the U.S. government to make its implicit guarantee of these agency securities explicit, without the authorization of Congress.”
“Taxpayers are now on the hook for these losses, and the accounting rule change is a mere reflection of that fact.”
Fannie Mae and Freddie Mac were nationalized at the peak of the crisis in 2008 to avoid losses and stem the credit contagion
Glad to help out.
With unemployment continually rising and millions of foreclosures waiting in the wings the value of those assets are probably half.
More on that Fed accounting change...
Both of those two were actually Queens, Banking Queens :)
Dirty Dodd even got himself a friends of Angelo loan
Not Carter. It became that weird public/private thingy under Johnson.
Reference bump - thanks! ;-)