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Ear to the Ground

SEC Slaps Former Fannie, Freddie Execs With Fraud Charges

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Posted on Dec 16, 2011
Flickr / futureatlas.com (CC-BY)

It’s a start, but let’s hope Friday’s fraud charges against six former higher-ups at Fannie Mae and Freddie Mac don’t represent the only attempts that the Securities and Exchange Commission will make to hold financial executives responsible for the disastrous economic mess that’s still upon us.  —KA

AP via Google News:

Two former CEOs at mortgage giants Fannie Mae and Freddie Mac on Friday became the highest-profile individuals to be charged in connection with the 2008 financial crisis.

In a lawsuit filed in New York, the Securities and Exchange Commission brought civil fraud charges against six former executives at the two firms, including former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron.

The executives were accused of understating the level of high-risk subprime mortgages that Fannie and Freddie held just before the housing bubble burst.

“Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was,” said Robert Khuzami, SEC’s enforcement director.

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Blueokie's avatar

By Blueokie, December 17, 2011 at 1:59 pm Link to this comment

I find myself in agreement with other posters here, that this is essentially more electioneering on the part of Obama.  A Civil Suit against already disgraced former executives from Freddie and Fannie is, at best, pure theatre.  As the last few years have shown just about every financial house could easily be classified as a GSE.  For the Administration to go for, what will almost undoubtedly be, a toothless slap on the financial wrist for these executives of the conservatives and corporate pundits favorite scapegoat for the looting of America is an illustration of this President’s contempt for the rule of law and the intelligence of the population.  I expect speeches and fund-raising letters in the next few days touting his fearlessness in taking on the banksters.  All fraud.

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By bpawk, December 17, 2011 at 11:31 am Link to this comment

Took a while to do this because ... Obama has an election coming up so he has to throw the masses a bone ...

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By truedigger3, December 17, 2011 at 10:24 am Link to this comment

This is a CIVIL lawsuit and not a CRIMINAL indictment.
It will end up possibly with fines without any admission of guilt. The fines will be small fraction of what these fraudsters made as a result of their fraud. HA HA HA What a fu*cking farce!!
And these fraudsters are not the biggest fish in the fraud sea. There are bigger fish, sharks and whales which are swimming freely and undisturbed!!
This is the election year and it is time for make believe theatrics and bullshitting from TEAM OBAMA.

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PatrickHenry's avatar

By PatrickHenry, December 17, 2011 at 6:51 am Link to this comment

Good news, this same enforcement needs to be followed through every bank and investment firm on Wall Street.

Seize all their assets here and abroad and put them in jail.

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Lafayette's avatar

By Lafayette, December 16, 2011 at 9:34 pm Link to this comment

Finally, some good Holiday Cheer in this news.

Let’s hope it’s a start in a massive campaign to indict and prosecute those most responsible for the SubPrime Mess and its consequences - both the Seizure of the Credit Mechanism in the fall of 2008 (due to the failure of Lehman Bros) that triggered the ensuing Great Recession of 2009 from which we have yet to see the light at the end of the tunnel.

I recall reports at the time that these same “directors” had walked away from both institutions with bonuses in the million dollar range - for having decided that they get involved in the then lucrative business of “securitizing*” SubPrime Market debt (that had originated from other credit companies with lower lending standards).

They thus abandoned the tight creditworthiness discipline that had been a hallmark of their lending procedures.
=============

*Securitizing = A pooled group of financial assets that together create a new security, which is then marketed and sold to investors.

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By Cary, December 16, 2011 at 8:49 pm Link to this comment
(Unregistered commenter)

Yes, it’s a good start, but if the SEC only prosecutes
F & F execs it will only reinforce the right’s claim
that the great recession was all the fault of Fannie &
Freddie (and the Community Reinvestment Act), i.e. the
government.  Of course there are huge holes in this
argument on several levels, but that hasn’t stopped the
right from constantly claiming it, and millions of
people from believing it.

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