SEC Charges Ex-Fannie Mae, Freddie Mac CEOs

By John Ydstie

The Securities and Exchange Commission is going after former top executives at Fannie Mae and Freddie Mac for allegedly committing securities fraud. Karen Petrou, of Federal Financial Analytics, says her company knew Fannie and Freddie were not disclosing all their subprime loans. “What we didn’t know and what does surprise me is the magnitude of the differences. We knew they were wrong; we did not know they were howlingly wrong.”  In Freddie Mac’s case, she says, for a CEO not to know his company owned $244 billion in shaky mortgages would be equivalent to not knowing your company owned a major bank. Syron has not commented on the charges. But Petrou says the company’s regulator, the Office of Federal Housing Enterprise Oversight, should have known, too. “They didn’t,” she says. “That’s appallingly clear, because if they had been effective regulators, we wouldn’t have Fannie and Freddie in conservatorship costing the taxpayers $170-plus billion to date, and not counting the billions more to come.”

For the full story click here: http://www.npr.org/2011/12/16/143859110/sec-charges-fannie-mae-freddie-mac-officials.

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