Money for Nothing and Houses for Free.
How would you feel if a burglar was caught inside your home stealing everything of value, and when the police went to make out the police report, you were told that you would have to write a check for $5000.00 to pay for the burglar’s legal fees? Well that happens indirectly, with the Lawyer-enriching “Right to Legal counsel” laws we have today. Those public defenders are not working for free. Another kind of this Lawyer – enriching thievery from the taxpayers was exposed this past week involving two companies whom I feel have as much culpability as Wall Street did in the housing crash of today. Meet Freddie Mac and Fannie Mae. These two companies announced that they want you the taxpayer to pay for their 160 million dollars in legal fees stemming from investigations of long-term fraud and corruption. With a new Republican majority in the House of Representatives today, it seems like Fannie and Freddie were/are trying to take in every single taxpayer dollar they can before serious investigations expose their dealings.
The New York Times ran a piece on this on 01/24/2011.* While this article does address some serious facts, it also seems to deny the responsibility of the top three executives to pay for their own legal fees stemming from years of their own corrupt, incompetent practices. The Times also refused to state the huge bonuses and salaries the top three culprits raked in right in the middle of the housing crisis. Here are a few observations from that article. Parenthesis at end are my comments.
The Times points out three key players in the story:
“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.”
The story then demonstrates how for the last 4 years of Democratic rule, the House has done little, if anything to investigate the travesty, that both Freddie Mac and Fannie Mae have become:
“Since Fannie Mae and Freddie Mac were taken over by the government in September 2008, their losses stemming from bad loans have mounted, totaling about $150 billion in a recent reckoning. Because the financial regulatory overhaul passed last summer did not address how to resolve Fannie and Freddie, Congress is expected to take up that complex matter this year.”
Could it all be simple ineptitude? Of course not – outright corruption is certainly another part of the problem:
“ Well before the credit crisis compelled the government to rescue Fannie and Freddie, accounting irregularities had engulfed both companies. Shareholders of Fannie and Freddie sued to recover stock losses incurred after the improprieties came to light.”
So here we have evidence of “accounting irregularities” resulting in lawsuits, yet instead of criminal charges and government intervention to stop the fraud, our Congress not only turns their heads the other way…But decides to put the taxpayers on the hook for the entire bill, as evidenced further in The Times article:
“Freddie’s problems arose in 2003 when it disclosed that it had understated its income from 2000 to 2002; the company revised its results by an additional $5 billion. In 2004, Fannie was found to have overstated its results for the preceding six years; conceding that its accounting was improper, it reduced its past earnings by $6.3 billion. Mr. Raines retired in December 2004 and Mr. Howard resigned at the same time. Ms. Spencer left her position as controller in early 2005. The following year, the Office of Federal Housing Enterprise Oversight, then the company’s regulator, published an in-depth report on the company’s accounting practices, accusing Fannie’s top executives of taking actions to manipulate profits and generate $115 million in improper bonuses. ( So they were found to be cooking the books to enrich themselves, paid fines that prove it, yet still feel the taxpayer should pay their legal fees? )
This is like a bad remake of the movie Groundhog Day here, where the mistakes and improprieties happen over and over again. When President Obama and the Democrats passed the partisan Financial Regulatory Reform bill last year, they also once again chose to ignore the problems at F&F. That’s right, when Republicans tried to demand that the Financial Regulatory Reform bill include Fannie Mae and Freddie Mac, they were told told no. Coincidence? Everything happens for a reason, and I would like to hear the President’s and his Democratic Party’s reason for allowing F&F to continue writing checks on the taxpayers account.
“Fannie Mae also settled a fraud suit brought by the Securities and Exchange Commission without admitting or denying the allegations; the company paid $400 million in penalties.” (Nothing to see here folks, just move on, but make sure you keep writing those checks drawn on the people’s Federal funds.)
When it comes to our Government today, we have such a bloated beauracracy that the checks and balances within Government, written into our Constitution are being ignored. The “Federal Housing Finance Agency” agreed to pay for the proven fraudster’s legal fees? What next? Bernie Madoff being pardoned, so he may become the Secretary of the Treasury? Or maybe the Chairman of the Federal Reserve? Further on in The Times piece we see:
“After the government moved to back Fannie and Freddie, the Federal Housing Finance Agency agreed to continue paying to defend the executives, with the taxpayers covering the costs.”
So here we have proven fraud, corruption and incompetence within Fannie and Freddie, with absolutely nothing being done about it over the past eight years. Not one person has even been given criminal charges or jail time. Just the opposite, they still have that blank check written on the taxpayers account. Seems to me it is pretty obvious here, as to why the people no longer trust their government.
- Fannie and Freddie Fatcats Still Raking in Taxpayer Dollars. $35M in Bonuses
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- Fannie, Freddie and Foreclosures- Exploring the True Costs to the US taxpayer
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