Originally published on Fri December 16, 2011 2:24 pm
RENEE MONTAGNE, HOST:
In federal court in New York this morning, the Securities and Exchange Commission charged six top executives of Fannie Mae and Freddie Mac with civil fraud. The SEC says the executives of the giant mortgage companies mislead investors about the amount of subprime loans their companies held during the housing bust. NPR's John Ydstie reports.
JOHN YDSTIE, BYLINE: Among the six charged are former Fannie Mae CEO Daniel Mudd and former Freddie Mac CEO Richard Syron. Both were heading their companies when the housing bubble burst in late 2006 and 2007. The director of the SEC's enforcement division, Robert Khuzami, said the executives mislead the market about the amount of risk on the company's books. Specifically, the complaint charges that Syron claimed Freddie Mac's single family business had, basically, no subprime exposure at the end of 2006, when, in fact, the company held over $140 billion in subprime loans. The federal government has spent about $150 billion rescuing Fannie and Freddie, which failed under the weight of their toxic, high risk loans. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.