What the Treasury Bought with the GSEs: 132 MM in legal bills for accounting irregularities that occurred before the subprime crisis
Yes, I know that $132 MM is a drop in the bucket when talking about the $250-360 BB that Fannie and Freddie will cost us, but we didn't think that US taxpayers would be responsible for millions in legal bills for Franklin Raines, the ex-CEO of Fannie, before the crisis even started. Via NYT:
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.
The bulk of those expenditures — $132 million — went to defend Fannie Mae and its officials in various securities suits and government investigations into accounting irregularities that occurred years before the subprime lending crisis erupted. The legal payments show no sign of abating.
Documents reviewed by The New York Times indicate that taxpayers have paid $24.2 million to law firms defending three of Fannie’s former top executives: Franklin D. Raines, its former chief executive; Timothy Howard, its former chief financial officer; and Leanne Spencer, the former controller.
|Source: NY Times|