Judicial Watch • Defense Of Corrupt Freddie/Fannie Execs $200 Mil And Growing

Defense Of Corrupt Freddie/Fannie Execs $200 Mil And Growing

Defense Of Corrupt Freddie/Fannie Execs $200 Mil And Growing

FEBRUARY 24, 2012

As if it weren’t atrocious enough that U.S. taxpayers are on the hook for the monumental bailout of Fannie Mae and Freddie Mac, they’re also getting squeezed for tens of millions more to cover the legal costs of the corrupt executives who drove the government-run mortgage giants to the ground.

So far the legal tab has run north of $200 million and it will only keep growing, according to the government agency (Federal Housing Finance Agency—FHFA) that oversees Fannie and Freddie. In a report released this week, the FHFA’s inspector general reveals that the unscrupulous officers responsible for Fannie and Freddie’s collapse have mounting legal bills and taxpayers will continue picking up the exorbitant tab.  

They are charged with a variety of crimes, including securities and accounting fraud, and the cases are expected to drag on right along with their already-bloated defense funds. In fact, the inspector general suggests the government only work to “limit” (not stop) legal expenses “to the extent possible and reasonable.” Another brilliant suggestion from the FHFA’s watchdog, which supposedly is looking out for taxpayers, is to “control costs of legal expenses.” 

It’s like there’s no end to the Freddie and Fannie madness. Political corruption of epic proportions is at the heart of the scandal. The lenders collapsed because those who operated them played fast and loose with accounting, risk assessment and executive compensation issues while Congress looked the other way and protected them from much-needed regulation. For years Freddie and Fannie backed risky mortgages and implemented a policy of lending to high-risk individuals with poor credit.

Lawmakers, including then-Senator Barack Obama, protected Fannie and Freddie from proper oversight because they got political contributions from the mortgage giants. In fact, Judicial Watch uncovered records that show for more than six years members of Congress were aware of the massive problems at Fannie and Freddie yet they did nothing. As a result taxpayers are on the hook for at least $400 billion and $5 trillion in mortgage liabilities.

Not surprisingly, the Obama Administration has worked diligently to keep secret all records related to Freddie and Fannie’s political contributions. In 2009 JW sued to obtain them and the FHFA admitted it might possess the documents but said it’s not obligated to release them to the public. Because Freddie and Fannie are wholly operated by the federal government, JW maintains that the records are subject to the Freedom of Information Act (FOIA). The case is still active in the U.S. Court of Appeals for the District of Columbia Circuit.

Overall, members of Congress have received nearly $5 million in political contributions from Fannie Mae and Freddie Mac in the last decade, according to a reputable nonprofit that tracks money in U.S. politics. Among the top recipients of Fannie and Freddie’s political largess: Former Connecticut Senator Chris Dodd, then-Illinois Senator Obama, Massachusetts Senator John Kerry, former Utah Senator Bob Bennett and Alabama Congressman Spencer Bachus.  


  

 

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  • hmaue

    The resolution of this entire matter can easily be resolved with another legitimate legal audit from a professional legal auditing company that can stand behind the audit findings. The legal auditing company these agencies retained I do not believe could withstand a challenge by the law firms. All anyone would have had to do is perform a simple public record check and the findings would have eliminated do to the significant amount of negative information sometimes by judges who chastised the company. But whenever a government agency chooses a low bidder based upon that and a slick website then the rest is history and you get what you pay for which in this case is essentially worthless. The company that founded this industry 26 years ago is based in Saint Louis and was never even contacted even though we made both agencies aware of the problems with the vendor they choose. My only reason for even making comments is that all this hand ringing and finger pointing could and still can be resolved should both agencies decide to retain the services of a professional legal auditing company. All the fees and expenses aleardy paid need to be audited and simultaneously a proactive cost management program needs to be implemented to insure that all law firms are adhering to the agencies billing guidelines and are providing receipts for all expenses. This is the only way that all interested parties can be assured that law firms are billing in accordance to the agencies billing guidelines and if any firm wants to challenge those audit findings the selected auditing company can withstand the challenge. This entire process should be looked upon as a win win situation because if the audit findings show that law firm(s) and found to be in compliance with those billing guidelines then it proves their is good oversight but if some firms are found not to be in compliance then depending upon the degree of non compliance can be trained in proper billing practices. All this boils down to it is simply the right thing to do both the agency executives and th taxpayers who are footing the bill and as a former government executive I always looked at spending money from a taxpayers point of view.

  • kjs420

    Maybe if it was part of their job description to commit fraud, I could see the government paying for legal defense, but these people acted individually to commit fraud, so why are taxpayers paying to defend crooks? If I committed fraud at my work, my boss’s wouldn’t pay for my lawyer.