Fannie Mae, Freddie Mac spent $100 million on former executives’ legal bills

The Washington Post ^ | 22 Feb 2012 | Brady Dennis

[Theoria]

Government-backed mortgage giants Fannie Mae and Freddie Mac have spent nearly $100 million since 2004 to defend three former executives from lawsuits and other investigations, part of a mounting set of legal bills for the troubled companies, according to a newly released report from the inspector general of the Federal Housing Finance Agency.

The payments, which were included as part of compensation and benefits packages provided to officers and directors at Fannie and Freddie, underscore the uncomfortable and conflicting role the government faces as conservator for the firms, whose bad bets on risky home loans before the financial crisis have cost taxpayers more than $130 billion. Under those compensation agreements, Fannie and Freddie are obligated to pay all legal expenses for the executives involved, including advance payments for expenses incurred during the course of legal proceedings.

That means the independent FHFA, which oversees Fannie and Freddie, has the unenviable role of trying to help the mortgage companies avoid losses by defending ongoing lawsuits, while simultaneously trying to keep down the hefty costs of attorneys fees for former employees. It is a bind that appears to have no easy solution. In fact, the FHFA’s inspector general offered two recommendations in Wednesday’s report that will prove easier in theory than in reality — work to limit legal expenses to the extent “possible and reasonable,” and continue to try to control legal costs wherever practicable.

“FHFA and Fannie Mae believe that their options are limited in paying current legal fees for former officers and directors, which now amount to almost $100 million,” FHFA’s inspector general, Steve Linick, said in a statement, adding that his office “nonetheless believes that FHFA must continue its efforts to both control and scrutinize these legal expenses now and in the future.”

[Theoria]

Joy.

[Migraine]

After FIVE paragraphs they finally mentioned the SOB’s name — Franklin Raines. PRAVDA.

[RicocheT]

As far back as 2004, Republicans in Congress were warning Fannie and Freddie were headed for failure. The Democrats said no no Frank Raines is OK and so are these lenders.

U Tube link “Democrats in their own words Covering up Fannie Mae, Freddie Mac scandal”

http://www.youtube.com/watch?v=IyqYY72PeRM&feature=youtu.be

[Baynative]

Former Clintonista Jamie Gorelick was rewarded for her work defending him by being given a top job at Fannie Mae. In that role she rewrote the rules on stock options, bonuses and salary levels, allowing her to collect $26 MILLION in her short time there. She also designed regulatory loopholes specifically to shield Franklin Raines (who collected over $90MILLION in the same period) - just as she did for Clinton.

She was instrumental in the plan to bundle and sell sub prime mortgages before moving on to Amazon. While with Clinton she went beyond the designs of the FISA act and wrote in blockages to the communication process between agencies that may have aided in allowing the Muslim murderers to pull off the 9/11 attack on American civilians.

So impressed was Barack Obama by her ability to subvert our laws and sidestep legal confines that he had her on the top of his short list to take over the FBI in 2009.

[mo]

Sounds like possibly the typical “DC Shuttle” game with Congress passing regulatory law ...which subsequently creates work/compliance/litigation...engendering more regulation...ad nauseam ad infinitum...